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Report on Operations
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R. Jeffrey Orr
President and
Chief Executive Officer,
Investors Group Inc.
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During 2002,
much attention was paid to the efforts being made to realize
on the opportunities from the Mackenzie transaction and the
focus on cost management in the face of the difficult market
conditions.
A number of other
important developments occurred during the year which will
impact the future direction of Investors Group’s business,
including:
- The establishment of new leadership
of Investors Group’s distribution activities with the
appointment of Murray Taylor as Executive Vice-President,
Financial Services Division. Mr. Taylor joined Investors
Group in 2001 after 25 years with our sister companies,
Great-West Life and London Life. Prior to his taking on
his distribution leadership responsibilities, he led the
Investors Group-Mackenzie transition activities.
- The re-affirmation by Investors Group
management of its commitment to strengthening the Consultant
Network by providing a highly competitive package of products,
services, support, training, compensation and non-monetary
benefits to our Consultants.
- The introduction of changes to our
industry-leading Consultant training programs – changes
which resulted from good communication and close cooperation
between field management, many of our Consultants and head
office personnel.
- The clarification to our Consultant
Network that Investors Group’s efforts will continue
to be aimed at a broad range of Canadians and that we will
support the development of products and services for many
different segments of our client base.
- The reiteration of financial planning
as the discipline at the centre of the value package we
deliver to clients.
These developments helped clarify Investors Group’s
future direction for the thousands of men and women located
across Canada who serve our clients and for our employees
at head office. They have also helped to prioritize our
energies and our efforts.
Strong, rewarding client relationships
Since 1926, Investors Group has built
its reputation and its business on the strength and longevity
of its client relationships. These relationships are established
by creating unique financial solutions to address the client’s
individual needs, and offering a comprehensive selection of
financial products, services and advice in support of that
purpose.
Investors Group’s strong commitment
to financial planning is reinforced through a comprehensive
network of Consultants, and we provide them with the products,
training and professional support they need to enrich their
relationships with clients. These Consultants examine the
client’s long-term goals and tolerance for risk, and
recommend balanced, diversified and professionally managed
investment portfolios. They also look at the retirement planning,
tax planning and estate planning needs of the client, and
provide them with knowledgeable advice.
The strength and resilience of our client
relationships was once again the focus in 2002, as global
financial markets entered the third year of a bear market.
Although market lows continued to be tested on news of corporate
reporting scandals and the uncertainty of war, Investors Group
supported our Consultants with tools and information designed
to put these conditions into a longer-term perspective. The
value of this approach was evident by the great majority of
clients who continued to take a long-term view, in spite of
the market turmoil. We remain confident that by taking a long-term
view, clients are more likely to achieve their financial objectives.
A wealth of products, services and
support
Investors Group continued to enhance its
products and services in 2002, improving the quality and breadth
of selection that sets it apart from the rest of the industry.
On the investment management front, 47%
of Investors Masterseries™ mutual funds had year-end
ratings from the independent Morningstar service of four or
five stars, and 81% had a rating of three stars or better,
both significantly higher than the Morningstar universe and
consistent with results from the past several years.
In October, we launched Investors Group
Corporate Class Inc., Canada’s largest tax-advantaged
fund structure featuring tax deferred switching among 46 mutual
funds offered by nine of North America’s leading investment
advisors. Also during the year, we continued to refine our
external advisory relationships, with Mackenzie Financial
Corporation and Goldman Sachs taking on new mandates, and
asset allocation specialist First Quadrant being added as
a sub-advisor.
In November, Investors Group, Great-West
Life and London Life announced the signing of a definitive
agreement with National Bank of Canada to make banking products
and services available to our combined 3.2 million clients.
The range of products will include investment loans, lines
of credit, deposit accounts and credit cards. The banking
products will be distributed through more than 7,000 consultants
and advisors across the country, under branding that is unique
to each company.
These products and services complement
a comprehensive selection available to Investors Group clients,
including:
- Investors Masterseries™: 76 exclusive
funds managed by Investors Group’s global investment
management team.
- Partner funds: 50 funds offered in
association with AGF, Beutel Goodman, Fidelity, Goldman
Sachs, Janus, Mackenzie, Sceptre and Templeton.
- Specialty fund and other products:
including the iProfile™ managed asset program, Masterseries™
portfolios and Allegro™ multi-manager portfolios, segregated
funds and GICs.
- Securities services: provided through
Investors Group Securities Inc.
- Insurance products: from Great-West
Life, Clarica, Manulife Financial, Maritime Life and Sun
Life.
- Mortgage services: through Investors
Group mortgage specialists across Canada.
- Financial planning services: investment,
retirement, tax and estate planning advice provided through
Investors Group’s Consultants and specialists.
Investors Group will continue to build
upon this platform to offer Consultants and clients the best
overall offering of its kind in Canada.
2002 Results
While mutual fund sales in 2002 reflected
weak industry conditions throughout the year, the non-mutual
fund side of the business experienced strong growth in a number
of areas.
Mutual Funds
- Gross sales through Investors Group’s
Consultant Network were $4.9 billion in 2002, compared to
$5.5 billion in 2001.
- The redemption rate on long-term funds
was 10.2% in 2002 compared to 9.6% in 2001, significantly
lower than the industry average.
- Net redemptions through Investors Group’s
Consultant Network were $109 million.
Insurance
- Sales of insurance products were up
5.6% to $32.6 million for the year.
Securities
- Assets under administration increased
by 9.4% during the year.
- External assets gathered totalled $1.2
billion in 2002.
Mortgages
- Mortgage originations amounted to $702
million in 2002.
Investing in the community
While 2002 was a challenging year, Investors
Group was proud to be able to maintain our commitment to the
communities in which our clients live and work. Through the
Investors Group Community Investment Program, we contributed
more than $4.3 million to grassroots organizations and projects
throughout Canada while recognizing the efforts of our Consultants
and employees who volunteer their time and skills to improve
the local quality of life. In honour of its long-standing
commitment to philanthropy, Investors Group was named the
winner of the 2002 Imagine Mutual Fund Community Investment
Award at the Canadian Investment Awards Gala.
The year ahead
The short-term outlook for Investors Group
will continue to be influenced by the performance of the financial
markets, whose outlook remains uncertain at this time. We
have great optimism, however, for the medium and longer-term
prospects for our clients and our business. We will continue
to concentrate on the prudent management of expenses, while
working with Mackenzie and the other members of the Power
Financial group of companies, such as Great-West Life and
London Life, to make our respective operations more effective
and efficient.
We have a clear understanding of our strengths
and our competitive advantages, and are hard at work making
our business even stronger.
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