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CI Financial Corp
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Good afternoon, ladies and gentlemen. At this time, I would like to welcome everyone to the CI Financial 2017 Fourth Quarter Results Webcast. [Operator Instructions]Please take note of the cautionary language regarding forward-looking statements and non-IFRS measures on the second page of the presentation. I would now like to turn the meeting over to Mr. Peter Anderson, CEO of CI Financial. Mr. Anderson, you may begin.
Thanks very much, and welcome to the CI Financial Conference Call for the Fourth Quarter of 2017. Joining me on the call, as always, is Doug Jamieson, CI's Chief Financial Officer. He will provide a financial update on the quarter and the year, and also discuss the progress we have made today with the Sentry Investments integration. Also available on the call are members of CI's executive team who lead various business lines. 2017 was another busy year at CI. Not only did we continue to build our business through the acquisitions of Sentry Investments and BBS, but we also strengthened our existing businesses, including CI Investments, CI Institutional Asset Management, Assante, CI Private Client, First Asset and GSFM. I'll provide more information after Doug's presentation. I do want to address the question upfront all of you have indicated you want to discuss, redemptions. We saw outflows in Q4 from Sentry Investments, CI Investments and CI Institutional. This was not unexpected and the result of several factors, including the near-term impact of the acquisition of advisers; including changes in sales relationships; large CI and Sentry funds in favor of asset classes, including Canadian equity and balanced products; and finally, short-term performance in some of our larger funds due to their conservative outlook. At this point, we -- at this -- on the last point, we continue to support the investment approach of our PMs and, therefore, understand their performance for the second half of 2017. For these funds to be in first quartile during the second half would mean they would have deviated from their conservative processes. With regards to sales, we're seeing signs our sales strategy is working, with increasing growth sales from the broker channel and new advisers buying CI and Sentry products for the first time. Remember, we're only 4 months into this integration. And traditionally, the first few months are the bumpiest. We bought Sentry as a long-term investment. We remain in redemptions for the start of 2018 and expected to be in redemptions for a period. However, we do anticipate we'll move in a flat monthly sales later in the year. We have been through this sort of environment before, and we know how to get through it. Despite the sales results in Q4 though our total assets, including Sentry, grew by $2.3 billion or 1.6% quarter-over-quarter. I want to also say a few words about the remainder of the Sentry integration. Although Doug will go into more detail, I can confirm everything continues to go well. As we bring the businesses together, we're hitting all of our targets on schedule with no negative surprises. We are meeting our forecast for achieving synergies. We're realigning the portfolio management teams and the sales teams, and very talented people from Sentry have joined CI throughout our company. Overall, we continue to be pleased with the acquisition and our progress with the integration to date. 2018 is shaping out to be quite different from 2017. We are seeing volatility returning to the markets. Last year, there were only 4 days when the S&P 500 lost more than 1%, and the maximum dry-down in 2017 was a record low of only 2.8%. This lack of volatility was unprecedented and very challenging for active managers. 2018 appears to be presenting us with a market where stock picking will be crucial in generating returns. This is part of active management and CI's portfolio management teams. And with that, I will hand the call over to Doug.
Thank you, Peter. First, we'll take a quick look at the highlights comparing 2017 to 2016. Average assets under management increased 14% to $126.3 billion. This increase reflects the flows and performance of CI's investment products as well as one quarter of the acquired Sentry assets. Reported net income declined 1% and, on a per share basis, increased 2% to $1.89. However, there were provisions taken in both years, so we've adjusted for those to arrive at adjusted net income, which was up 9% to $579.2 million and up 12% to $2.19 per share. Free cash flow was $648.4 million, and that was up 7% from last year, and shares repurchased totaled $413.2 million compared to $290.9 million in 2016. Looking at Q4 compared to Q3. Average AUM increased 18% to $142.5 billion from $120.3 billion. Reported net income was $128.6 million or $0.47 per share compared to $140.8 million or $0.55 per share last quarter. But this quarter, we booked a $39 million provision for costs related to the Sentry acquisition. We also recorded a $5.6 million adjustment to contingent consideration, and this adjustment pertains to the consideration payable in the First Asset transaction of November 2015 and represents the final payout on that deal. Adding back those provisions, this quarter's net income was $162.9 million or $0.59 per share, up 16% or 7% on a per-share basis. Free cash flow was up 14% to $180.6 million, and share repurchases were up to $150.6 million. Now looking at Q4 year-over-year highlights. Average assets under management were up 24% from $114.8 billion in last year's fourth quarter. Net income was up 6% from $121 million last year or 16% on an adjusted basis from $140.6 million to $162.9 million and up $0.06 on a per-share basis or 11%. EBITDA in the quarter, up $258.4 million. Now you have CI run rate EBITDA of over $1 billion annually. Free cash flow grew 17%, and you can see the effect of the large ramp-up in share repurchases compared to the fourth quarter of last year. I also wanted to point out an accounting change that is set out in Note 18 to the financial statements and explain the impact of that change on CI's results. Effective January 1, CI will write off the entire balance of deferred sales commissions to retained earnings. From that point on, there will be no amortization of DSC expense, but any new spend will be expensed in the period it is incurred. This will be applied retrospectively, so CI's comparative quarters will be restated beginning with our Q1 2018 disclosure. And I've set out the approximate impact for the past year. The difference between amortization and spend was $67.2 million pretax or $0.19 per share on an after-tax basis. Given the trend and amortization and spend levels, the impact on 2018 will likely be slightly lower than this, but we do expect it to add at least $0.15 to most earnings estimates. It will also reduce EBITDA by the amount of spend during the year as this will become the expense, and we do not anticipate adding it back in our calculation of EBITDA. CI's total SG&A was 36.4 basis points, up from 35.9 in the third quarter and up from 35.5 basis points in the fourth quarter last year. Spending in dollar terms increased to $130.8 million, mainly as a result of the addition of Sentry for the quarter and BBS for 2 months, although CI continues to invest in key areas of the business, mainly technology, middle office and sales and marketing. CI's quarterly free cash flow jumped to $181 million this quarter with the addition of Sentry, and this surpassed our original estimate of approximately $175 million for the quarter. Looking at the return to shareholders. The first column shows the past year's operating free cash -- sorry, operating cash flow adjusted for the after-tax provisions taken and the deferred sales commission paid to get to free cash flow of $648 million. CI paid out significantly more than that in the form of dividends and share buybacks at $781 million. And in the fourth quarter, CI increased its buybacks to $151 million, which brought the return of free cash flow to shareholders to $245 million. We continue to favor buybacks over dividend increases and expect this level of repurchase to continue. As Peter said, we are quite pleased with the progress on the Sentry acquisition, as the synergies achieved in the fourth quarter were well ahead of forecast. This led to EBITDA of $30 million in the quarter, ahead of our projection of $25 million. The run rate spend and basis points at Sentry will be at CI's level by the end of the first quarter, and we expect essentially all of the expected synergies to be realized by the end of 2018. We are also still very comfortable with the value of this transaction. We modeled the insignificant redemptions for an extended period in determining a purchase price that provided a margin of safety. I will now turn it back to Peter.
Thanks, Doug. As I said earlier, 2017 was a very busy year at CI. We made 2 strategic acquisitions and a total of 3 in the last 14 months, including GSFM in Australia. These acquisitions are very important to CI's strategic plan as we build out the company to compete in this rapidly changing industry. In addition to an increase in market volatility, as I mentioned earlier, we continue to face industry challenges, such as pressure on fees, the active versus passive debate, increased regulation, the increasing dominance of the banks and the Canadian financial services and new products that compete with our core businesses. As I have said for some time, there is an overcapacity of active managers in Canada, and we're seeing weaker portfolio managers and companies fall to the side. We view this as an opportunity for CI, with our scale and market share being a key competitive advantage. Now let me take you through the results of our business lines. At Assante and Stonegate, every way we measure this business show that 2017 was another very successful year. We had a very strong year in net sales, growth in the high-net-worth business and new assets from recruitment of advisers. Assets under administration grew to $43 billion, a year-over-year increase of 12%. The recruitment of advisers increased by over 50% in 2017 to almost $1 billion, as measured by assets. Assante and Stonegate continue to be a strong engine for CI, and we maintain our commitment to investing in their growth. First Asset had another very good year, with strong net sales in active ETFs. Assets grew to $3.8 billion by year-end, representing an annual growth rate of 50%. First Asset successfully launched several new ETF products managed by CI portfolio managers. We expect to see continued growth through 2018. We plan to fully integrate First Asset's business into CI Investments later in 2018. This will allow us to offer a product lineup with more choice and flexibility and reduce confusion for investors and advisers choosing CI products and our portfolio managers. CI Institutional had a strong year in sales in 2017 as net sales grew to $800 million for the year. This number excludes Sentry institutional sales. The institutional pipeline remains strong, with one large fixed-income account already being funded earlier this year. We expect 2018 will be another good year for this business. We're also very pleased with the success of our Australian business, GSFM. The firm posted strong net sales in its retail business. Given that their retail assets have fees closer to the fees we earn in Canada, these gains more than offset the redemptions in their lower-fee institutional business. The institutional redemptions were the result of performance issues with one of GSFM's original portfolio management teams and the rebalancing of assets within some of the large Australian superannuation funds. Although we can never be absolutely sure, we believe that the institutional business is less likely to experience similar large redemptions in 2018. The momentum at GSFM has continued this year, and we're assisting them in expanding their product offering in Australia. In December, we ceded the Grant Samuel Cambridge Global Smaller Companies Fund, a global equity mandate focused on small and mid-cap companies. Cambridge has successfully created significant outlook for our Canadian investors as we look -- and we look forward to replicate -- let's try that again, replicating this for the Australian market. We have just started the process of integrating BBS Securities. On a stand-alone basis, their business has significantly grown since the deal closed, measured by their assets under management and the number of new accounts opened. We believe new clients of BBS feel more comfortable knowing that a large and well-capitalized company's supporting BBS. We are also seeing opportunities to leverage BBS' technology throughout CI, particularly at Assante and Stonegate. Finally, our traditional retail business, CI Investments, and we're talking about this business excluding Sentry. Although this business remained in redemptions in 2017, we had better results than in the previous year, including 2 quarters of positive net sales. If you exclude the closed business, which includes legacy products, such as segregated funds that are no longer sold, our sales at CI Investments were positive. The overall improvement was the result of several factors, including improved gross sales in the broker channel, which is a major focus for our company. We also saw improved sales from Assante, Sun Life advisers and other financial planners. With the acquisition of Sentry, we have invested in a larger sales team, and we remain committed to our ongoing sales strategy. We are confident the sales trend will improve as we move through the year. Nothing has changed in our view, and we are confident in our retail strategy and executing to plan. So to summarize, in 2018, we will continue to integrate and build on the businesses we have acquired over the past 24 months: First Asset, GSFM, Sentry and BBS. These were acquired because they supported one or more of CI's core plans. So far, all 4 are meeting our expectations. We continue to focus on enhancing shareholder value through sound expense management and, when appropriate, like now, share buybacks. We like our position in the Canadian market, and are focused on ensuring we meet and exceed the expectations of our fund investors, advisers, employees and shareholders. And with that, we conclude our remarks, and we'll be pleased to take your questions. Operator?
[Operator Instructions] The first question is from Gary Ho from Desjardins.
First question's just on the Sentry side. I'm assuming I shouldn't annualize the $900 million of net outflows this quarter for that business. Are there more lumpy kind of onetime redemptions there that it's worth noting? How should I think about the run rate outflows for 2018? Is it -- can I use $1.5 billion to $2.5 billion as a good goalpost there?
Yes. We certainly wouldn't say you should annualize the fourth quarter. We expected it to be rougher at the beginning, and we did have that institutional redemption. I'm hesitant to give exact guidance, but certainly less than an annualized fourth quarter would make sense.
Okay. And then, Doug, since I have you there. Just on the accounting change story, can you walk me through with the change in 2018 again and the impact on earnings and EBITDA? And I assume there's no impact on cash flow.
Correct, no cash flow impact. Essentially, if 2018 were to replicate 2017, which we expect the amortization would be lower and the spend will be lower, but if you have a net difference between the 2 of $60 million to $70 million, that will increase pretax income. And then after-tax income would be also increased by $45 million or so.
Okay. And then you had a comment on EBITDA as well. So that's not gained back?
Right. Because if we used to add back amortization of $90 million, and now we're not doing that, that will reduce the EBITDA.
Got it, okay. And then just lastly, maybe for Peter. We saw the Scotia-Jarislowsky acquisition earlier this week. Just wondering if you can give us your thoughts on M&A for CI, what you're looking at, institutional retail, geography and maybe size perhaps.
I mean, first of all, I mean, this is a company that was built on acquisitions. So we're always looking at them. I would say, right now, we're quite focused on the continued integration of the business -- all the businesses, but that doesn't prevent us from certainly taking a look. I think that the Jarislowsky-Bank of Nova Scotia idea will certainly provide some interesting thoughts about other businesses similar to Jarislowsky. And whether they feel that there's a time to exit, I don't know, but we always benchmark every transaction that we do against buying back our stock. And for the most part, especially today, we feel that our -- it's better and more efficient to buy our -- to buy back the stock. Although I would say that there are always strategic opportunities that present themselves that would fit into our business, so this sort of recap where we're always looking. We have certain ideas that we're more interested in than not. I don't want to get -- I won't get into details, obviously, but we are also today very focused on integration of the businesses and moving our business forward.
And any preference? Canada or abroad?
No, I don't -- look, if there is a -- I mean, if we saw opportunities that fit in from Canada, absolutely, we would take a look. I mean, I think we would be very specific on what we are looking for. And outside, if we saw another opportunity in Australia, I think we would take a look at that as well. I think it would be more difficult to go to Europe. And I think in the U.S., that market is so competitive, I'm not sure that we would be that enthralled there as well. But yes, I mean, Australia is a pretty interesting market, where I think that there might be some opportunities. But like I said, we're more focused on the integration today than anything.
The next question is from Geoff Kwan from RBC Capital Markets.
Just you talked about Sentry. I think there's a thought that you can get back to flat by the end of the year. On the retail funds, excluding Sentry, so your CI funds, I'm just trying to get a sense of what your level of conviction is that you can bring that to flat or back to positive at some point this year.
Yes, definitely. Though what I mean with that is I'm not committing myself to saying that we will be -- by the end of the year, we'll be -- we'll have flat sales. What I am saying, though, is that we're going to move towards flat on a monthly basis. So like do we -- are we going to be moving in that direction? I feel very confident that we're going to be moving in that direction when you look at all of our retail business, Sentry, CI, First Asset, so on and so forth. So I'm quite confident that we can do that. And we have a very large sales force now, as big as anybody in the industry. We have a -- we're training. We have more management. We have smaller territories. We have realigned compensation for our sales team to focus on things that are very important for us as well, prospecting for new advisers. It's just one example. So yes, I mean, we've been in this position before. None of us like it. But we're as competitive as anybody out there, and we're going to -- I feel very confident we can get to where with what we said.
Okay. And then on the dividend and buybacks, the comment that you guys made, is the way to think about it is continued share buybacks, as you've talked about? And on the dividend side, like you still plan to probably do dividend increases, just not at the same kind of frequency, magnitude as you've done in the past, just given because you're putting more towards share buybacks. Is that the right way to think about it?
Yes. I would say if there are dividend increases, they would be minimal, that most of our cash will be directed to buyback. Because we said -- as I said last -- so I was just going to say, as we said in the last -- our last call, I mean, this is a discussion that we have with the board every single quarter, every quarter. And so -- but today, as Doug said and that we said earlier, based on where we are with the multiple and where our stock trades, I think everybody in this company and everybody in the board is more than happy to buy back our stock as aggressively as we possibly can right now because we think it's cheap.
Okay. And just my last question is -- and I apologize if you had referenced this earlier. Just given the pullback in markets, and we had a bit of recovery, if there's any kind of comments that you'd make around what it's been. Because you also talked about with your -- the CI ex-Sentry funds being a bit more conservative, if that's helped, maybe not necessarily from the sales perspective, but maybe limiting on the redemption side.
Geoff, it's Neal here. Yes. So it's -- obviously, the pullback was just a couple of weeks. But we did see, in those more conservative funds, a type of positive performance that we'd expect. And whether that had an impact on flows or whether it was just really that we're into February now, which is RSPCs, which tends to be higher gross. And gross flows anyways, it's hard to say. But certainly, from a performance standpoint, we did feel some indication over that period that the funds did substantially better than their comparative passive benchmarks did.
The next question is from Graham Ryding from TD Securities.
My first question would just be with the cost synergies that you've realized from synergy -- from, sorry, Sentry, you're ahead of schedule. Can you quantify sort of where you're at relative to it being fully integrated?
I'd say we're at least halfway. We kind of indicated on the last call that we have acted on more than half, and we saw that come through in our results in the fourth quarter. Like I said, we think, by the second quarter, we'll be at CI's run rate, which means we're most of the way there.
Okay. And then, I guess, should we see that in the SG&A as a percentage of average AUM? Is that where that's going to trend down?
To a certain extent, yes, that, in theory, the Sentry SG&A would come down. But as I said, CI, we're looking to reinvest in the business in a few particular areas. So while we seldom give guidance for forward SG&A spend, there will be kind of a mix of areas where at the CI level we're spending versus the synergies realized on the Sentry side.
Got it. There's an adjustment of free cash flow in the quarter. Was that related to the CRA deposit that you got back?
No. It's entirely the Sentry provision and the First Asset continuing consideration.
Got it. The change around DSC and the impact that's going to have on earnings and EBITDA, I guess, why the change?
Essentially, it's a fairly theoretical thing with IFRS and the international accounting standards that DSC is now being recognized as a cost of gaining a sale as opposed to being recognized as an intangible and, therefore, it will be expensed effectively as a sales expense and serve an intangible asset. And I did want to clarify my earlier answer on the change to EBITDA. The impact is entirely the amount that we're spending is now an expense. And so that will reduce the level of EBITDA, whereas the impact on earnings is the change between amortization and spend. So if we spend $20 million next year, EBITDA would be lower than it otherwise would be by $20 million.
Okay, okay. Got it. So it's going to be a drag on EBITDA, but it's going to be a benefit for EPS. Is that the right way to think of this?
Correct.
Got it. My last one is the buyback. I think you mentioned you expect it to continue at this rate. I just want to know if that was a reference to the Q4 rate or 2017 overall.
To the Q4 rate of $150 million.
The next question is from Tom MacKinnon from BMO Capital.
I don't know if -- I got on the call this late. I'm not sure if you talked about the outflows with respect to Sentry. I think there was somebody suggesting $900 million in terms of the questioning. Is that right? And how much of that was in retail? And what was that in institutional?
Yes. I don't think we explicitly gave it a number. Another analyst may have done his own calculations. But I get that the general tone is that, yes, Sentry is in redemptions, and we expected that given the nature of the transaction.
And were they in primarily retail? Were there any institutional?
Primarily retail, but there was some institutional. But I just...
It's Peter. I would reference the MD&A, which I have the things broken out between retail and institutional.
Yes, I got that. It's right in front of me.
Yes. Okay, good. But in my remarks, I just want to remind you that we said that Sentry, CI Investments and CI Institutional in the quarter were in redemptions.
Pardon me. What was that again, Peter? The Sentry and CI in retail and institutional combined?
Redemption.
Yes. And that's from the table there?
I beg your pardon?
That's from -- yes, that's the $900 million in redemptions that we're showing on that table there?
I just want to make sure that people got it. I don't think that the entire amount in retail was Sentry.
And the -- and I think you had said that, with CI on its own in positive net sales for retail in the quarter?
No. I said that, for the year, CI, on its own, excluding the, what we call, closed book of business, which is the -- which is our segregated funds that don't -- that can't be purchased anymore, that are just in, for all intents and purposes, it would be a runoff, I guess, which will take a long -- well, it can take a decade or longer, it might be even more than a decade to run off the -- though we would've been in net sales.
Okay. But no comment -- I thought you said something about the third and the fourth quarters being positive, but on its own. But did I misunderstand that?
So we had 2 quarters of positive net sales in 2017.
Okay, okay. That's good. And then a question with respect to SG&A. If we looked at the SG&A in the quarter of 131 million, is it safe to say that if we annualized that and added a little bit of inflation that, that should be a run rate for 2018? How should we be looking at that?
Yes, that's not a far-off guess as far as our spend rate would be.
And up in the area, if annualizing it with a -- and then adding about 5 -- 4% or 5%, does that seem reasonable?
Sure.
Okay. And then second -- and then the question with the $31 million in terms of the impact on the EBITDA in the year, where do we find that spend? Like if we want to make these adjustments kind of going forward, we don't really know the history of that spend. Or do we?
Yes, from the -- just the state of the cash flows.
Okay.
Yes. It should show spend on deferred sales commissions each quarter and annually.
Okay. And then finally, with respect -- Peter, you said, when you look at our multiple, you think that we're cheap. So you want to continue to buy. Well, your -- what multiple are you looking at here? Because your earnings multiple just changed by about 6%. Your EBITDA multiple just changed by, I don't know, 3% or 4%. So what is -- what would you be looking at when you say, we're cheap on a multiple? Do you look at the earnings multiple or the EBITDA multiple? Because these are jumping around with these changes here.
Tom, it's Doug. We generally look at the forward PE multiple. It's something that we can easily compare ourselves to other companies as well as various indexes of asset manager or even the exchanges. So we -- internally, we look at CI's relative value compared to our historic cash flow and EBITDA, but the main one we use is forward PE.
Okay. Despite the fact that this change in accounting has actually increased the earnings here by about 6%?
Correct.
[Operator Instructions] The next question is from Scott Chan from Canaccord Genuity.
Peter, you talked about the Assante and the successful recruitment adding $1 billion of EUA in '17. Maybe you can talk about the reason for that success. And like heading into this year, do you target a kind of greater recruitment than you did last year?
Yes. I mean, there's an awful lot of advisers in various places that are looking for a new home for a number of reasons. It could be dissolution with the firm they're at today. They are -- and that's free will, basically, what -- most of the reasons for that. Look, we would -- if we could find $10 billion worth of advisers to join us and met the criteria, we would do it. I mean, I think that there's -- we have a strong plan to -- yes, to grow out this business and expand the Assante platform as quickly as we can. I mean, we are -- one of the things we've talked briefly about is the -- is BBS and being able to lever off of their technology with their separate account platforms and a building out of an SMA platform for them. We're going to do that to make it even more appealing for certain advisers. We are quite -- we will have greater over this year. We will have greater opportunity to attract advisers that may not come to our company's aid because we don't offer a certain platform. We will have that by the end of the year if things go as we plan. So having -- growing Assante is an enormous priority for us for a whole host of reasons. And so we are putting an awful lot of resources behind them.
And I guess, the other important distribution channel, the broker channel, I think you talked about gross sales being higher in that channel. Maybe you can just talk about some of the factors that are driving that.
Well, I mean, a lot of it because we have a strategy, and we're focusing an awful lot of our attention on IIROC. We've hired a lot of new wholesalers, I should say, that are -- we're dedicating right to that channel with the acquisition of Sentry. And we're already working on this before, but the acquisition of Sentry provided us with a lift or a -- of new advisers that have never done business with CI or have not done business with CI in years. And so those relationships have really helped us. And we're seeing a significant number of -- or an increase in the number of meetings that we have within the -- with IIROC or broker channels. So that activity always pays off. I mean, we have a -- even though we're not in net sales today, we're seeing a lot of very positive signs within IIROC and within the MFDA, within Sun Life and Assante, where we're seeing growth. We have an awful lot of our portfolio managers that are in top quartile numbers, and they're in the space that -- in spaces where advisers are investing their money now today.
Okay. And my last question is for Neal. In the top GSFM, I know 3 new partners or brands are kind of added to the platform in terms of Munro, Man and CI. Have any of those contributed to sales to date at all?
Yes, the Munro definitely has. They've got a global equity strategy that has been selling nicely, along with a global fixed-income product from the patent and regal relationship we've got down in Australia as well. And then that sort of rounded out on the retail side with some business into the Australian equities strategies. All 3 of those are contributing. The Man is not at this point, and the strategy that we funded -- strategy that we've ceded with our Cambridge team, the institutional marketing on that really starts in April. And that's a longer-term build for us on both the institutional and the retail side down there. So in the interim, the new product that's generating business is the Munro product. And just a reminder that both -- well, GSFM owns a portion of that business. And so CI, through our ownership with GSFM, is an owner -- part owner of Munro.
And is Munro, primarily, the strategy is cater to the retail segment? Or is there some institutional planned?
Yes. At this point, it's exclusively focused on retail. And then, I guess, maybe it's one last point, Scott. It would be a strategy that as we look at potential for 81-102 alternative mutual funds that we can consider bringing to Canada later this year as an 81-102 alt fund.
It's the long-short fund you're talking about, right?
That's right, yes.
Our last question comes from Paul Holden from CIBC.
So first question's related to earnings accretion from Sentry. So your adjusted EPS was up 11% year-over-year in Q4. How much of that do you figure came from Sentry accretion?
Paul, it's Doug. I'd say, for sure, a large part of the change in earnings per share was the Sentry accretion from last quarter to this quarter.
Okay. So Q-over-Q, the growth was 7%? So 5, 6 points of it was probably Sentry?
Correct.
Yes. Okay, that's helpful. And then, Doug, part of your -- or one of your answers earlier was that you said some of the costs savings would be reinvested back in the CI business. So maybe you can just review what some of those areas of reinvestment are from...
Primarily, it's -- a lot of things are technology or IT-related these days, but we've been spending on our sales team, and we'll continue to do that, as well as marketing efforts, and then the middle office in terms of supporting our PM teams. And trading is another area of focus for this year.
Okay. And then speaking of the sales teams and integrating Sentry sales, CI sales, and then also the relevant PMs, can you talk to us a little bit about where you are at in that process? Like are the CI wholesalers now going out and selling Sentry product and vice versa?
Yes. I mean, we did that in November of last year. We identified the people within -- on the wholesaling side within CI and in Sentry where we wanted to build out the -- we wanted to build the business around. So that was done in territories where we're realigned. I mean, it was a really large effort and endeavor to do because it was really impacted 100% of the advisers in Canada. And I think we did a great job. So we have a significant larger sales team as a result of that, plus the support behind, and we have wholesalers with smaller territories now because of this increase in the number of wholesalers we've got. On the portfolio managing side, we did that around the same time. We identified the mandates that we felt that we could sell. We integrated some of the assets into CI teams, and we're building a business around a core group of Sentry portfolio managers. Mike Simpson, Aubrey Hearn and James Dutkiewicz, they are keeping around 80% of the assets within -- inside of that. And we're very, very comfortable with that with the team. And we think that they're going to fit in perfectly within CI, and they're going to -- when markets are -- fit their style, they're going to be very valuable to our company.
Okay. And then final question here. You seem quite confident that the level of redemptions in Sentry will decline throughout the year until you reach the point of breakeven. I don't doubt that they will decline because the first quarter or 2 are always the toughest. But what specifically are your wholesalers going out and talking to IAs about in terms of bringing down the level of redemptions, right? Because that's going to be the problem today is the gross redemption's less more so than the gross sales. So what kind of things are they going out and telling advisers?
It's Roy Ratnavel, Head of Retail Sales. So they'll be doing a couple of things. One, we are looking to -- as Peter said earlier, a significant amount of the Sentry advisers have never had exposure to CI products. So we're doing cross-selling opportunities there as assets move from North American balanced income mandates to fixed incomes or global equity. And as you know, CI has a very strong lineup there. So we are cashing some of them on the other end. That's one strategy. Another would be to go out and certainly prospect new advisers within Sentry who have never done this with CI before. And we believe these 2 things can continue to increase the gross sales for the overall firm, while cashing the redemption on the other side.
Thank you. There are no further questions registered at this time. I would now like to return the meeting over to Peter Anderson.
Well, thanks, everybody, for listening. We're here if you have any other questions, and we will see you at the next quarterly call in 3 months. Thanks again. Bye now.
Thank you. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.