All right. Thank you. Welcome back. For those of you not here yesterday, my name is James Glynn. I'm the equity analyst covering diversified financials at National Bank, of course. This morning we're joined by CEO of Power Corp, Jeff Orr. Thank you, Jeff, for joining us again this year. I suppose this is probably the last one for you. Well, it could be. I have a feeling it will be. That's correct. It's my pleasure to be here. Thank you. Thanks for having me. Let's start with the Power Corporation strategy that has really been, you know, on your watch, executed, you know, so far beautifully. You know, to unlock value and drive a narrowing of that discount simplification. You know, what's next, I guess? What's the next phase of this strategy? Thank you for that question, James. I think the strategy today, we're in a better position to execute the strategy than we were six years ago and when we launched it. I don't think it's going to be a radical change in what we need to do going forward. I just think we're at a different stage of execution. The value that's been driven has been created primarily by getting the earnings parts of our businesses, being Great-West Life and IG Wealth and Mackenzie at IGM, delivering more consistent and higher growth through a combination of organic investment over, quite frankly, many years before six years ago, but continuing through the period, and then aided by acquisitions. The second piece of it has been we make a number of investments in businesses that will earn money for us in five years and 10 years, but don't show up in earnings right away, and those have been validated. Think of Wealthsimple and transactions there or Rockefeller at IGM. The earnings part has grown steadily. The part that are not yet earnings growth has surfaced value. Then we have simplified our structure. We've simplified our focus on financial services from what it was, which is we had all kinds of different businesses at the top of the house. Yeah. Then we've simplified our communication. Those parts of the strategy are all intact. The only difference is we've got more momentum in the businesses, we've got more organic growth in the businesses, and we're driving a lot of cash flow. You know, where the strategy goes in the future, James and team will ultimately make the changes they feel necessary based upon the opportunities and the challenges in the marketplace at the time. The elements of what we've done in the last six years are better right now today than they were. I'll add one last thing. The value creation has not been a valuation play. I get people say, "Wow, your stock has gone so well. Incredible returns in the last, you know, six years. I mean, this has had its run." I go, "Whoa, whoa, whoa. Great-West Life when we announced reorganization six years ago, was trading at a 10 and change forward earnings multiple, and the last time I checked, it's like mid-11s. It's had one turn, but it's produced 12% earnings growth EPS for the last four years in a very steady way." IGM, when you look at the growth in the NAV piece, is not in a high valuation, and our discount's come down, but it's still pretty high. It hasn't been a valuation story. It's been a growth earnings story, and therefore, the pieces are all intact. Yeah, I agree. You did mention James, so there is a leadership transition coming. I think this is pretty straightforward, simple question with an answer, but we shouldn't expect any changes in the strategic priorities or capital allocation as James comes on board. Is that fair? Well, you've got James up here for IGM. Yeah. I don't know if you're allowed to ask Power Corporation questions. Listen, I think, as I said earlier. Well, first of all, I'm delighted with the leadership changes, starting with James. If I make a larger comment, our group in the last 12 months has changed the leaders of all three main companies in the business plus Power Corporation. We've just gone through a major year of transition, and one of the things you need to do well in running a business is not only drive the strategy and the operations, is actually to build a bench and then have good leadership in place and then manage that transition. David Harney was up here two meetings ago. Correct. David, that transition from Paul Mahon was successfully done in the last 12 months. We've announced James coming into Power Corp. Damon Murchison coming into IGM is gonna be fantastic. We're so fortunate to have Damon in our group. GBL changed their leader as well. We've had a lot of leadership change in the last 12 months. James himself, this is a classic Power transition playbook. He was six years running IGM. He knows IGM well. He's been on the board of Great-West Life. He knows the Great-West Life folks well. He knows the Power Corp well, people well. So he knows our business. He's very experienced leader. He knows financial services, and he's got the judgment and the temperament to run the business. I feel great about James and the opportunity to have him come in and take on the role. Great. Very pleased with that. Excellent. Let's talk about Great-West for a second. Obviously, more detail in the previous chat, but maybe give your take. Excuse me. The performance has been really strong, as you mentioned, outperformance on growth. Are we expansion? From your perspective, talk about what has gone right at Great-West, and then what can we expect more of down the road. What's really driven the shareholder returns is consistent earnings growth, like 12% EPS growth over the last four years. It's diversified across the business, but obviously led by Empower. It has all been a combination of organic investment. We have leading franchises everywhere, you know, one of the things, and Great-West exemplifies that. We've got four investing principles, and they look like that they're words on a page, but we followed them for the last 30 years. That is, we have a long-term perspective, and the second one is we build leading franchises. If you go around, if some of you heard David Harney earlier today, like in Canada, we have 14 million client relationships. In the United States, we have 19 million people in our DC plans. We have 35%-40% of the Irish market. Like even in the U.K., we're the number 1 group insurance player. We're the number 4 annuity provider. Like, we have leading scale businesses, and they have been invested in heavily in the last 10 years. The second thing we've done is a lot of M&A to reposition the businesses in the last five, six years so that we've got strong organic growth. Going forward, Great-West Life is not dependent on doing acquisitions to create and to meet the 8%-10% earnings growth hurdle that they've set for themselves. Yep. They're not dependent on M&A to do that, but M&A will add to that. I see that continuing, I said earlier, they're trading at 11 and change forward multiple on a business that's delivering that kind of growth, plus you've got the dividend yield. I don't expect the returns at Power or Great-West Lifeco in the next five years to be the 20+ that we've created in the last six years. I think that's unrealistic unless we hit something we get really fortunate and pull off some great transaction or something. I don't think we need to produce that. If you don't, even if you don't get a revaluation, and we're pretty cheap compared to most of the sectors, and you deliver on the earnings growth plus the yield, you're gonna get a teen, you know, low- to mid-teens return, 13%, 14%, 15%. Yeah. Then we get anything going for us, we can hopefully do even better than that. We're not a particularly high-risk business. You know, it's not like we don't have any risk in the businesses. Of course, we do. We're in financial services. We have balance sheets. Yeah We tend to run our businesses at a lower risk point than the peer group, and that's by design. Like I look at Great-West Life going forward, and I feel very good about its prospects. It's still gonna be Empower that's gonna be the main driver, the principal driver, the highest driver of. Yeah of earnings. With Empower, do you see more M&A opportunities to support that, or comfortable with the organic outlook there? I think they will come, but they can go. You can go a long time between transactions. We bought J.P. Morgan in 2014, and then the next acquisition was in 2020 with MassMutual, other than Personal Capital, which we did to build our wealth platform, which was also 2020. We went six years without an acquisition. The strategy to roll up the 401 business was launched in 2006. We decided in 2006, we were number 10 in the marketplace. We had 4 million participants that the 401 business in the U.S. was gonna mature. It was gonna go into outflows. There were 40 suppliers, all there selling mutual funds. They were there to sell mutual funds, crummy at record keeping, and we saw an opportunity to consolidate the market as it got into a more mature phase and build a big player that could earn money from adding all kinds of different services to the participants when they're in plan, and ultimately building the rollover business on the back end of it. It only took us, you know, 20 years to put that in place. I think we will grow in the double digits without further acquisitions. At some point, in answer to your question, there's gonna be more M&A opportunities that will come. Right. 'Cause I don't think everybody is gonna end up surviving in that business. We'll get an opportunity to look at everything. We have a lower cost position than everybody. We've got an experienced team that knows how to integrate. We don't buy things and then say, "Well, maybe we'll get to that, you know, next year." We actually put them all on one platform. I look forward to that, but I don't know whether it's next year or whether it's five years from now. I have no idea. Of course. It'll come when it comes. Shifting to IGM then. Mm-hmm. Both IG Wealth and Mackenzie have returned to net flows pretty consistently now for several months. How do you look at that? Is that more the industry backdrop improving, or do you attribute it to perhaps some more internal initiatives that are at play at IGM? Yeah. I think it's a combination of both, and James will be up here. He can give you his perspective on it. Yeah. I think IG Wealth, let me start with that, 'cause that's the biggest part of the business and the biggest earnings driver. IG Wealth, I would just invite any of you who've been in the business for 10 years to look at the Investors Group model 10 years ago and where IG Wealth is today. It's a reengineered business. It's got a different focus, mass affluent and high net worth. Mm-hmm. It's got a much different pricing point. It's got a different product suite. It's got an incredible technology platform, and it is going to grow organically, in my view, when the market's in inflows. The whole market did come back. Yes. When inflation hit and interest rates went way up, what is it? Three years ago. The mass affluent market and the lower end of high net worth money went into certificates of deposits or paying off mortgages. The whole sector went into outflows, and it's come back and got its head above water in the last few quarters. IG Wealth and Mackenzie are benefiting from that. IG Wealth has got, I believe, more going for it from that. I think it's a much more positioned market and is gonna outgrow in the kind of lower end of the high net worth market. It's gonna get really good growth in there. Mackenzie, I think, is also coming back based upon its own product work and breaking through in the institutional market. It still has some products that are underperforming and some outflows that are still dragging it. Mm-hmm. If you've been around asset management long enough, I presume you're all in asset management in the room or you wouldn't be here, you know, you end up with strategies, and some of them go through periods where they don't perform. When they don't, you don't change your style. You just kinda live with where the market is. They've got a few of those strategies that are still in outflows, but the platform itself is in very strong shape. I look for very good things in the upcoming couple of years here from Mackenzie. Good. Good. IGM, though, while you're on it, I think the other part of the story there is that IGM has really built up optionality in its four strategic investments in wealth management and asset management. Mm-hmm. Obviously, Wealthsimple and Rockefeller are shining examples of those. That portfolio, with the exception of China Asset Management, which is producing earnings, is not yet at a point where it's producing any earnings. You know, you look out five, six, seven years from now, and those are going to be the businesses that are gonna be driving high growth. So that's a little bit of our playbook. I don't wanna go on for too long on this, but I'll come back to your original question. We have the bulk of our businesses at Power Corp at IGM across the portfolio are earning money. We have a piece of our businesses which we've actually shrunk a little bit in the last 5, 6 years, what we call the NAV portfolio, and IGM's got its own version of it, that doesn't produce earnings. Our shareholders and public shareholders are looking at earnings and dividends growth, and they don't get it from that part of the portfolio. We're long-term, and those parts of the portfolio are gonna be what's gonna be driving the growth when somebody's sitting here 5 years from now asking James these questions. Yeah. Those parts are gonna start to kick in and create growth. There's been a lot of work at IGM, and they've got a great portfolio of strategic investments. Yeah. I agree. Let's shift to the alts investment platform. A lot of acquisitions, adding capabilities over the last couple of years. What are some of the gaps or areas that you're gonna be looking at here in the near term to continue to build that out? Then as you think about the alts moving forward, you know, where is the earnings going to come from? Where is that contribution emerging over the next several years? Is it gonna be management fees, performance fees? Is it the balance sheet investments that you've made? Where's that earnings contribution coming from to Power Corporation? Yeah. There are three places we can get it, and the first is that we have about CAD 1 billion of capital underpinning each of Sagard and Power Sustainable, where we have seed capital. Yeah. We think it's a mix of some of it is fixed income, and some of it is venture capital, fintech. We think on balance, we'll earn about 10% returns on it, but it's not always earnings. That's the thing. Some of it, like our biggest fund is an infrastructure fund with Power Sustainable, and we have a big part of the fund and we consolidate it. There are windmills and sun and solar farms, et cetera, that actually produce negative income, but we're getting cash flow off them. It doesn't produce income, but it produces a return. Right. That's on the seed capital. We have the GP itself, and we're not managing those over the next 3, 4, 5 years to make profits. We're trying to grow them to a point where they have greater scale and profitability. There's carry. We'll get carry. The profits from the actual business are 5 years out. Like, so I'll use Sagard. It doesn't mean they're not being incredibly successful. Sagard, when we launched the strategy 6 years ago, had $19 million in fees from their fund management business. They have a $192 million run rate right now. That's in 6 years. Unbelievable growth. They have $200 million in costs. Yeah. They're breaking even, you know, and just under break even this year. This is where it's a challenge for the public investor. Our value and our Sagard position is now up to $320, I think is the mark US dollars from virtually nothing 6 years ago. It doesn't flow through the P&L. Right. That is still a challenge for Power Corporation. We are doing a better job of explaining the value creation in this part of the portfolio, but it creates all kinds of earnings noise. Last quarter was a perfect example of it, and we still have a challenge. We've come a long way, but we still have work to do on explaining the value creation in this part of the portfolio, 'cause it's not really earnings, James. It's gonna be NAV creation and return of capital, and we gotta do a better job of explaining that. I think we get a. I was gonna say a passing grade. We get an okay grade on our progress to date, but there's more we can do to explain that. Yeah, in several years. The areas that you might be looking at to, you know, fill out on that portfolio? Yeah, I think. Look, Sagard is the biggest piece of it, and it is a mid-market player. Paul III has basically said we need to be at $100 billion, and we're at, with the pending closing of Unigestion this week or next week, we'll be at $44 billion, up from $4 billion in 2019. It's mid-market, and he's trying to create mid-market across equity, across every asset class. What they've just done in acquiring Unigestion in Europe is they've created a solutions provider. Think of that as a multi-asset alternatives provider to go after smaller institutions, family offices, high-net-worth, where instead of coming with one product, you're coming with secondaries and a suite of products. I think you'll see Sagard driving the M&A agenda around mid-market across the product spectrum. CAD 100 billion would make them a very competitive mid-market player. I think in Power Sustainable, they're still at an earlier stage. They had no products when we launched it, and they've got four very attractive products. We've got CAD 4 billion in the strategies, but they're still trying to get those strategies to scale, and they have great teams in there. But they're an earlier stage in development. Right. I don't know if I answered your question, but if you're asking me what they're gonna buy next, I don't know. The answer to that is I don't know. We'll find out when you're free to share. I know where they're focused. Let's go to the topic, I guess, of the week or the year, which is the AI threats. Yeah As capabilities, you know, across financial services become, you know, more clear. Well, like, what's your take on how AI is gonna change traditional asset managers, advisors? Do you see it as a, you know, productivity improvements driver? Or, you know, is there a real change coming in traditional asset management and wealth management? It's definitely a productivity enhancer, and I think it's going to improve client experiences. I think it's gonna make advisors more productive. I think it's gonna make companies more productive. I said recently on our call, I'm not sure how much of that flows to the bottom line of the companies 'cause at the end of the day, we're in a competitive market. It's easy to see it as a threat to the business models. I would say every time there's been a technology change that's come through over the last 45 years that I've been in financial services, it hasn't actually threatened the market. What it's done is expanded the market. It's meant a couple of things. It's meant that more people in mass market and in mass affluent have gotten better service cheaper, and that's good for the overall industry. It's meant that advisors, whether you're a financial advisor or whether you're a professional operating in the industry, you could no longer get value added by simply transmitting information. You've gotta be continually going to a higher point on the value-added curve. For advice, if an advisor 40 years ago was telling people what stocks to buy and then emerged into saying, "How do you do asset allocation?" I think that's increasingly going to be, how do you build your portfolio? How does it meet your family needs? How does it meet your cash flow needs? How are you dealing with your tax on that? What's your insurance? How does that work with your estate? I think it forces advice to go to a higher level of value added with a stronger relationship. I'll just stay on advice for a second. I think there's two things you do in life that you are at the top of your need chain where you're gonna want a person involved, your health and your financial well-being. Your family and friends would be right up there with priorities, but you typically don't have a professional advisor on those. Those two. How do you buy health? Like, you go to your doctor today, and you're way more informed than you were 10 years ago 'cause you can go and check out whatever disease you think you might have or you heard something. You go in incredibly informed. Does that mean you don't want a doctor? Does that mean that you're gonna turn to Doctor Google for your diagnosis? I don't think so, right? You're gonna go to someone. I think financial advisors, when it comes, if you can afford an advisor and you've got your different needs, you're gonna want someone who's got experience to pull it all together for you. Maybe wrong. Maybe it's different this time. AI is way more powerful. I don't think so, but we'll see. I think it will definitely be a massive change project. We will get efficiencies. We'll get costs down. I think most of those will get passed to the clients or passed to our suppliers. I don't know that it's gonna be a big profit driver. Right. We'll get more productive, and advice is gonna have to step up. You asked about asset management, and I didn't really address that. I think asset managers will be so much more informed in terms of spending less time getting the basic information that they need. Putting the algorithms together, having the judgment as to how market's gonna act and where you're going to invest, I don't think that skill goes away. At least not in the foreseeable five, six, 10 years. I may be wrong on that. I don't think that's gonna go away. I just think asset managers who are running portfolios are gonna have a lot more information, and everyone else is gonna have it too. What do you do with that? How do you pull that together to put a portfolio together? That's not going away, I don't think. There, you got a couple smiling faces out there. I know. know. I'm just trying to make you feel good. I hear you say that. You know, start your day. No, I believe that. Maybe with a couple minutes left, we'll talk about the NAV discount narrowed very nicely earlier this year, late in the last year. It has since widened out maybe more towards the near and medium term averages. Where do you see the disconnect? What's underappreciated by investors? Maybe talk through your views on that. I mean, I view it as being something that doesn't go in a straight line. The net present value of our expenses is 3%, so I get to a 3% discount, and everything below that is a bargain. You know, we own 0.98 of a Great-West Life share for every share that's outstanding at Power Corp. So when you buy Power Corp, you're basically getting a Great-West Life share. They're almost trading on top of each other. One's at CAD 65.5, and one's at CAD 64, and you're getting the rest of the portfolio for free, so at this point. It's. You know, I view the discount as a real source of value, and it jumps around. I think people take profit and sell or people are buying, and they're not focused on the discount. The stock moves up and down, the discount moves. It's just an opportunity when it gaps out like this. I think over time, the more we communicate, the more we deliver, it's gonna continue to narrow. Our value creation is not dependent on the discount. Our value creation is what I started with. We got businesses that are earning at, you know, 8%-10% earnings growth, and we've got other parts of the portfolio creating great franchises, creating value. We got a lot of cash coming in. We're active on the buyback side. Yeah. We don't need valuation changes, be it the discount or the P/Es, to continue to drive the value creation. We do not need it. I think we'll get some of it. We don't need it to create good returns. Yeah. Now, that's, you mentioned the buyback. That's something that we didn't touch on in the questions- No It's certainly been a lot more active. We're sitting on a lot of cash right now. The discount is high, so you can. Yeah. I see us using that as a tool. Of course. More aggressively going forward here. Great. Okay. Well, that's it for our time, Jeff. Again, thanks for joining us this year. Good in all the previous years. It's been a pleasure. Great. Thanks, James Glynn. Thanks to all of you. Thanks so much.