CI Financial Corp.

Good morning and welcome to the CI Financial first quarter 2022 earnings call. My name is Brie Kerr and I'll be today's event specialist. There will be a question and answer session today, and if you wish to ask a question, you may press star followed by one on your telephone keypads. Your host for today's call will be Kerr Alkapine, CEO of CI Financial. So Kerr, please go ahead when you're ready.

Good morning, everyone, and welcome to CI Financial's first quarter earnings call. Joining me on the call is our CFO, Amit Muni. Together, we will cover the following topics, a discussion of the highlights of the quarter, a review of our financial performance during the quarter, an update on our sales to date for the month of April, an update on the execution of select items of our corporate strategy. Then we will take your questions. Before I discuss the highlights and challenges, I wanted to take a moment to acknowledge Lorraine Blair, who is our Head of Human Resources and the longest-standing employee in CI's history, on the incredible contributions that she's made to our company since joining in 1985. She will be transitioning to a much-deserved retirement over the summer. Lorraine has generated incredible impact for our employees and our shareholders. On the employee front, she has put in place our hiring processes, established the learning and development team, leads our diversity and inclusion efforts, and launched our employee engagement programs. On the shareholder front, she's provided valued advice as a member of the executive team and was actively involved in integrating all of CI's acquisitions. On behalf of CI Financial, I wanted to thank you for your contributions to our company, and we wish you well in retirement. Upon retiring, Lorraine will be replaced by Manisha Vermon, who is joining CI as EVP and head of human resources from BMO, where she was previously head of workforce strategies and client experience and the chief human resources officer for their capital markets and international wealth businesses. The resiliency of our business model and the benefits of our diversification efforts are evident in our first quarter results. amidst a backdrop of extreme market volatility and economic uncertainty. Our adjusted EPS of 85 cents was down one cent sequentially, despite the declines in both equity and fixed income markets. However, on a comparable basis, excluding the impact from the launch of CIPW, EPS would have increased 3.5 percent from the prior quarter to a record of 88 cents. Free cash flow of $202 million or $1.02 per share was a record for the company and a direct result of the capital we've deployed towards high quality wealth management firms over the past two plus years. We continue to take a dynamic approach to capital allocation. We focused our capital deployment towards reducing debt while also taking advantage of what we believe is a disconnect in our share price by buying back shares at the end of the quarter. Despite a very challenging market environment, firm-wide net flows were positive in Q1 on the back of continued strength from both our U.S. and Canadian wealth businesses. While our asset management segment experienced net redemptions, it is worth digging a little deeper to understand the flow dynamics in the quarter. Outflows were driven by tactical strategies, such as cryptocurrencies and gold, and fixed income products amidst rapidly rising interest rates. Our mutual fund platform, which makes up nearly 80% of our segment assets under management, saw net ed flows decline nearly 50% compared to the first quarter of last year. This highlights the structural improvements we've made to our business as a result of the complete transformation that we've undertook. This is also why we believe the flow turnaround in 2021 is sustainable, absent periods of extreme market volatility. We continue to make progress against our three strategic priorities. As we discussed on the last call, we successfully launched the CIPW partnership in January and have approximately 180 equity partners in our U.S. business. Overwhelming demand to increase their ownership from our partners shows the conviction they have in the strategy, although it did reduce our EPS by three cents in the quarter on a comparable basis. Finally, about a month ago, we announced our intention to pursue a subsidiary IPO of our U.S. wealth business. After a thorough evaluation of our strategic options, we concluded that this is the best route to unlocking shareholder value while retaining long-term strategic flexibility. I'll now turn the call over to Amit to review our financial results.

Thank you, Kurt, and good morning, everyone. Turn to slide four. Our global assets ended the quarter at $361 billion. Negative market sentiment offset the overall firm-wide positive flow we've had in the quarter, particularly in the wealth segments. This is the first quarter where we are reporting in three operating segments, asset management, Canada wealth management, and U.S. wealth management. In addition, we have reformatted our income statement to make it easier to understand our financial results. We have also provided additional operating data on the three segments. Additional historical information is available on the IR section of our website. Turning to the next slide, I'll focus my comments on our adjusted results as I walk through at a high level the earnings for the quarter. Adjusted net income was $171 million in Q4. Our earnings benefited $20 million this quarter from the full quarter effect of several acquisitions that closed at the end of last year. Our pro forma operating tax rate declined to approximately 25.2% as more of our earnings are being generated by our U.S. wealth management segment. We expect this lower rate to continue in future periods. We had additional expenses related to seasonal payroll taxes due to bonus payments in the first quarter. In addition, we lost two days of revenue due to less days in the first quarter. And lastly, other operating costs declined roughly $4 million. On a fully comparable basis to last quarter, our pro-foreign net income was $173 million, or $0.88 per share, as compared to $0.86 last quarter. Due to the overwhelming demand from existing partners for ownership in CIPW, we made the strategic decision to allow additional unit sales at pricing consistent with the fair market value for that business, which reduced our earnings by $5.5 million, giving us adjusted net income for the quarter of $167 million, or $0.85 per share. I'll now highlight revenue drivers for our three segments. Turning to the next slide. Asset management revenues declined due to negative markets and net outflows. Our Canada wealth segment benefited from transactional fees due to the RRSP season and increase in number of client accounts. Our U.S. wealth segment revenues increased primarily due to the full quarter effect of acquisitions. Non-controlling interests, which primarily represents the revenues owned by the minority owners of CIPW, increased due to the launch of the business on January 1st and the additional purchases by partners. Adjusted revenues were $587 million for the quarter. Turning to expenses on the next slide. On a fully comparable basis, total expenses increased slightly due to higher SG&A expenses and dealer fee payouts due to higher revenues from our Canada wealth segment. Expenses increased by $14 million due to the full quarter effect of year-end acquisitions resulting in adjusted total expenses of $384 million. On slide eight, we can review our capital priorities. We continue to generate strong cash flows of $201 million in the quarter. As we stated on our last call, we paused our buybacks due to transaction closings at the end of the last year. This quarter, we deployed $92 million to buybacks, as well as reducing debt by $246 million. Turning to the next slide, we can review our debt and leverage. At the end of the quarter, we had approximately $3.5 billion of outstanding debt on a gross basis, or $3.4 billion on a net basis, and our net leverage was three times based on our annualized first quarter adjusted EBITDA. We expect to deleverage over time as we generate earnings from the businesses we have acquired, as well as reduce debt, as we have demonstrated. Now turning to the next slide, I'll explain the accounting nuances related to our establishment of CIPW to help you better understand how it flows into our financials. Because of the terms associated with the liquidity features of the CIPW units, accounting rules recognize the units as a liability, not equity, and additionally as compensation expense, like a stock award granted to an employee. Each quarter end, we will recognize a liability reflecting the fair value of the units that have vested. The fair value will be based on a predefined valuation formula. The change in fair value for awards that have vested will be recorded as compensation expense in SG&A over the vesting period. To help put this charge in context, An increase in the liability or expense ultimately means that the value of CIPW has increased because of higher AUM, profitability, and operating margins, which benefits all holders of CIPW, of which CI is the majority. In addition, any distributions we make to the unit holders or recognition for non-controlling interest is also classified as compensation expense, which flows through SG&A. As you can see in our adjusted results, we have backed out these accounting charges to allow for better comparability and understanding of our financial results. Thank you, and now let me turn the call back to Kirk.

Thank you, Amit. Slide 12 provides a recap of our corporate strategic priorities. With the S&P having its worst April in over 50 years, down nearly 9%, and bonds falling between 4% and 5% during the month, not surprisingly, it puts significant pressure on flows, as many investors redeem products in favor of cash. When the markets settle and investors begin to put money back to work, I believe that the strategic changes that we've made will position us for growth. I've talked at length on previous calls about the changes that we've made to our investment management platform. pivoting from a series of competing boutiques to an integrated global platform and shifting from funds run by individuals to funds run collaboratively by a team. As you will see on this slide, it had a direct, meaningful, and immediate impact on our investment performance. It makes it much easier for clients to understand and navigate CI, and has positioned us to address opportunities around private markets, ESG, and tax efficiency collectively that I will discuss in more detail on an upcoming call. We continue to make significant progress towards achieving our aspiration of having the leading ultra high net worth and high net worth wealth management platform in the US. We have a number of initiatives underway to help us continue our strong organic growth rates, deepen and broaden our client relationships, and realize the benefits associated with an integrated and at-scale platform. I won't talk through everything on the page, but I did want to highlight progress that we've made on a couple key initiatives. On attracting new clients, we fully centralized all marketing functions under Julie Silcox, our Chief Marketing Officer. Having this unified structure and approach allows us to accelerate our rebranding efforts and implement initiatives like our digital lead generation program which is powered by advanced analytics and predictive modeling. In enhancing the client experience, we formally launched our CI tax function late last year. Despite being only a few months into the offering, this service across CIPW, we completed over 1,000 tax returns for clients this year. We expect this to scale considerably in the coming years as adoption increases and our platform grows. Also, earlier this week, we announced our intentions to launch a South Dakota trust company. To improve our operational efficiency, we've started to make progress towards creating a unified platform. As an example, within HR, we've transitioned our employees to a new and enhanced benefits program, have centralized functions like payroll and hiring, and have hired a head of learning and developments who will oversee our annual partner election process. We are still in the early stages of achieving our aspirations, but it's great to see the platform coming together so quickly. This is a testament to the quality of the people that have joined us and the collaborative approach that everyone has taken. I also want to touch on some very important strategic and structural changes that we're making to our Canadian wealth management platform that I believe will have a meaningful impact for our clients, advisors, and shareholders. Despite growing the business by over $30 billion and increasing EBITDA by 300% in the past two years, I believe this is a business that is not yet appreciated by our shareholders. Earlier this year, we unified our Canadian wealth management business under Sean Etherington, the former president of Asante, and Chris Enright, the former president of Align Capital, and have organized our platform into four verticals. Our new integrated approach to recruiting now puts us in a position where all advisors looking to transition are candidates to come to CI. We are creating a centralized operations and technology platform, eliminating the duplication associated with multiple systems and vendors. This will allow us to focus on having one world-class system with customization for each business model or archetype. And the investments we've made in CI investor services have created $100 billion plus of additional capacity, which we will use to service our wealth businesses and offer directly to end clients. As we continue to grow this business and increase our Canadian wealth earnings, I am confident it will unlock significant value for CI shareholders. To summarize, I think it's hard to argue that CI is a much stronger, more balanced and diversified business than we've ever been. And that is reflected in our financial performance and our firm wide organic growth. While we are still in the first inning of what we hope to accomplish, I believe we are well positioned for continued success in all of our businesses. With that, we will open up the call for your questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. we have our first question on the phone lines from Geoff Kwan of RBC Capital Markets. Your line is open.

Hi, good morning. Kurt, given where the share price has declined to, I know you've been deleveraging and even buying back some stock more recently, but from a capital allocation standpoint, does it make any sense in terms of shifting even more capital towards share buybacks and maybe you know, does it make sense to maybe then slow down the pace of RI acquisitions or maybe temporarily halt it? Just that would allow investors to better see your ability to create shareholder value in that strategy through things like margin expansion.

Sure. So, Jeff, as we've discussed, we do take a dynamic approach to our capital allocation. So, P1 was entirely focused on de-levering, and as you've seen, a reduction in the debt outstanding. And then when we got to a level that we were comfortable with, we started to ramp up our share buybacks. With us coming out of blackout in the next couple of days, I intend, given where the share price is today, to take advantage, which we often refer to as a criminal disconnect between the value of our company and the price that we're trading at. As it relates to RA acquisitions, as I've said all along, 2021 was a very unusual year. We've announced two transactions in the U.S. this year, one of which won't close until Q4. So we've absolutely slowed down the pace of the acquisitions, are focused on integrating. I touched on just really scratched the surface around the integration that we've had in the platform. So I think to answer your question, I'd say yes, we are intending to continue to buy back shares as long as this disconnect exists. And reinforcing points I've made before, this is certainly a a slower year for M&A and acquisitions as well.

Okay. And just my second question was, you know, with respect to the flows you're seeing so far in May, if you're not able to provide a specific number, just any sort of general comments on the market flow activity, particularly in your Canadian retail active asset management strategies, are you seeing, you know, the trends that you saw, I guess, over the last month or so, About the same or has it gotten better or maybe a little bit worse?

So I'm not going to comment on May just to be consistent with prior quarters. Just to talk about April specifically, as I touched on, I mean, you had the worst April since World War II, I believe, and a very significant decline there. in bond prices as well. So that was a challenging market environment for investors to put money to work. So we'll provide more visibility on May and June, obviously, when we release our quarter end results in a couple of months. But I think it's important to separate the temporary market volatility and the impact on flows from the structural changes and enhancements that we've made to our investment platform. Like there's a slide in the in the presentation that shows the immediate improvement in our investment performance relative to our peers. And as you know, investors often buy products based upon the performance that they're receiving. So I feel like through that, the new products that we've launched, the simplification of our offering, we are very well poised to flow when investors are willing to put capital to work.

Okay, thank you.

Thank you, Geoff. The next question comes from Kyle Roy from KBW. Your line is open.

Hi. Good morning. Maybe just a few questions on the US RIA IPO. Can you just talk a little bit about how that came to fruition? I don't think it was really part of the plan when you headed down the RIA strategy. What has been the reception from that announcement, from the principles that are a part of CI private wealth and any kind of push and pull factors from them and kind of the response would be really helpful. And then just on the logistics of the IPO, can you just talk about, you know, is there going to be any debt that's going to be, that this kind of new company is going to have on the balance sheet? and how will the, uh, the kind of the cash, uh, uh, how the acquisition be funded essentially in terms of the cash kind of split, um, uh, between the new kind of shareholders in the public company and, um, and, and, and CI, uh, uh, proper. Thank you very much.

Sure. So let me, um, try to take them, uh, sequentially. And if I miss anything, please, um, Please circle back on a follow-up. So the decision-making process for the IPO was relatively simple. We believe and are very confident, and I think hopefully investors see, based upon the quality of the business that we've assembled, the organic growth rates that we've achieved, the fee capture that we're generating, we have an incredibly valued business, a valuable business that isn't being valued by our shareholders as we're currently constructed. So over a series of months, the board was having conversations around how do we best unlock this value for our shareholders while maximizing all the strategic flexibility and keeping the great benefits associated with the business that we built and will continue to build going forward. So that was the decision-making process, and we felt 100% confident, like I said, that this is the best path for us forward and it provides us the maximum benefit. strategic flexibility. In terms of receptivity by our partners, it's been incredibly positive. I think it's, as I mentioned before, it's really a unique set of circumstances where we started 2020 with no assets in the U.S., and now we have a business that's large enough, growing fast enough, and profitable enough to stand on its own as a public company. everyone came to CI as part of this private partnership inside of our public company, knowing we were public anyway. So whether that partnership sits inside of CI Financial or inside of a new company, that doesn't really make a difference to any of them specifically. So I'd say that you know, very positive reception, a lot of excitement. And then as it relates to your questions on M&A, this just provides us with a lot more tools in our toolkit. As we think about pursuing acquisitions today, we really have a couple of different ways to fund it. And going forward, we'll be able to fund acquisitions not only with cash and or leverage or shares of our partnership, but also shares of the newly traded public company whenever that comes to market in the future. So we think it actually better positions us for success, and it does provide a lot more clarity for our shareholders. So if you think about our shareholders today that might be interested in a value-oriented business with income, we're forcing them to take exposure to our fast-growing business U.S. wealth management business, which is really a segment of the market that doesn't even exist in Canada. On the inverse, if you're a U.S. investor that's looking to take advantage of the strategy that we're pursuing in that marketplace, we're forcing you to take exposure to hundreds of millions of dollars of EBITDA in Canadian asset and wealth management. So we think that the separation of these two businesses, each standing alone as a public company, will give us allow us to get the appreciation of the business, but also give us a lot more tools to continue to grow and evolve our platform.

Great. I think you hit on almost all of them. Just one follow-up on the structure of the IPO. Will the new public company have debt assigned to it, or kind of how will that work between the relationship of CI and the public company, or will it be debt-free?

Hey, Kyle, it's Amit. It's a little early to have those discussions, so, you know, when we're ready, you know, all of that will obviously be in the S-1 when we file it, but it's a little bit premature for us to make comments on that.

Understood. Thank you very much.

Thank you, Kyle. We now have Scott Chan of Canaccord. Your line is now open.

Good morning. Maybe just a follow-up on the USRA's current Obviously, current valuations on the public markets have been impacted, and it seems like there's a widening disconnect versus private multiples and perhaps the value assigned to CIPW. Maybe you can maybe comment on what you're seeing on those valuations with respect to those three entities.

Sure. So I would say I think there appears to be a misunderstanding between how public multiples work versus private market transactions. So when public markets experience the decline in the contraction in multiples that we've seen, It's fair to assume that the private market transactions, both the baseline EBITDA by which these businesses are valued at and the multiples by which they transact, contract proportionately to what you see in the public market. So I think that there's this belief out there that while public market multiples have contracted, private markets multiples have held up. And I can just tell you, being involved and around processes quite a bit, as you could imagine, we've seen those really contract in lockstep. So there's no real difference between what we're seeing play out in the public markets and what we're seeing play out in the private markets as it relates to M&A of these businesses.

And on wealth management, specifically the USRA, how much operating leverage are in these businesses? Because we know with asset management, there's a lot of operating leverage. On the upside and downside, is there less operating leverage? Meaning that if assets are declining, your EBITDA is holding up well to be in line with the asset.

Yeah, I mean, so if you think about in the asset management business, it's a great question, Scott. If you think about there's two components. So let's just take April as an example, right? It's the worst month, worst April for the S&P in 50 plus years. So two things happen. Markets decline and people redeem strategies, right? So essentially you get the negative operating leverage. Typically on the upside, markets increase and it creates opportunities for people to put more capital to work. That exists because we're only running in our asset management business a portion of a client's portfolio, right? So somebody else, either an institution, an asset consultant, an advisor, is putting money to work in and out of a variety of different investment products. In our wealth business, we absolutely experience the impacts of the market, both up and down. But as markets strengthen or worsen, that's not typically a catalyst for people to switch their advisors. So we have an inherent level of stability in our wealth management business that doesn't necessarily exist in the same way in asset management, but on the on the counter, as you've mentioned, you get a little bit more positive operating leverage on asset management on the upside as people may put money to work a little bit faster. So, I mean, and that's the beauty of having the diversification that we now have economically between Canada and the U.S. and asset management and wealth management is they do provide, while they're both market-linked businesses and have a lot of strategic synergies, they do provide a nice counterbalance to one another in stressful or accelerating market conditions.

Okay. And just lastly, Kurt, if we kind of look at the issue why ETF flows are kind of holding up pretty well relative to mutual funds here today, and you kind of called out select ETFs that have impacted flows on the TI platform, but I'm just wondering overall in terms of your ETF platform, so the other funds besides the thematic stuff, you know, perhaps how it's trending relative to the industry?

The funds, I would say, relative to the strategies that I've mentioned that are more tactical in nature, the platform has held up very well. I think the investments that we've made in product development over the course of the past couple years position us to have products to sell in virtually any market environment. We're seeing demand now for our covered call strategies, our floating rate strategies. And I anticipate that we'll, as people, whenever the market settles, we'll create even more buying opportunities for people. And I think our ETF platform is very well positioned. Taking an asset class like crypto that's absolutely been destroyed over the past several months. A lot of people moved into crypto and allocated funds to first mover advantage or the first product in the marketplace. People have redeemed those strategies. So when you look at how well we're positioned with the lowest cost products in the market, I believe globally, when people are putting money back to work in those strategies, I assume that now that we have established funds, scale, ticker awareness that we will capture a disproportionate amount of those flows as well when people come back into crypto, whenever that is also.

Okay. That's helpful. Thanks. Thanks very much. Sure.

Thank you. We now have of TD Securities. Please go ahead when you're ready.

Hi. Good morning. On the Canadian wealth platform, it sounds like you're going to be more active on the recruiting front going forward. That would be my first question, if I have that right. And then secondly, is there anything that you're looking at from a branding perspective? I know you tried to really... uh, coordinate the branding, um, of the business, you know, CI overall, particularly in the asset management side. Is there anything you're looking to do on the wealth side? You know, I know you've got Aligned and Asante and a few different brands on the community wealth side.

Yeah, so, um, I would say, uh, so yes to the first question. We absolutely anticipate ramping up our wealth management recruiting efforts. I think the team's doing a nice job. Currently, I think the new structure where we have a centralized way of recruiting. So as opposed to Asante looking for advisors to recruit, Align looking for advisors to recruit, sometimes bumping into one another, now having just one unified approach to recruiting. So if you're looking, if you're an advisor anywhere in Canada and you're willing and open to exploring a new opportunity, CI has a business model for you. We have the Asante business model. We have the Align business model. We have the CI Private Wealth Partnership in Canada. And if you want to go completely independent, we have our CI investor services platform as well. Graham, as it relates to branding, all of our brands have adopted a linkage to CI. The one we haven't transitioned yet is aligned, but you will see consistency in our brands as well, right? So you have CI with the constant CI logo box, you know, Asante. You have the CI private wealth. You have the CI investor services. And then at some point, Aligned will adopt the CI name as well. The reason we hadn't prioritized that one is because Aligned is more of a platform for advisors to plug into as opposed to a brand that they're personally adopting and marketing in the same capacity. So we just had focused our efforts more on integration of the platform, the technology solutions, digitization and automation, but at some point we will get to that so all the brands will look the same as what we're doing the Canadian asset side and the U.S. wealth side.

Okay, understood. And then on the asset management side, the integration of the asset management division, where are you at with that process? Is all the heavy lifting been done or is there anything notable still to do and maybe an update?

No, there's a lot to do. I think a lot of, I'd say the toughest decisions And the most important structural changes have been made, right? The decision to move away from competing boutiques into an integrated platform to de-emphasize an individual and emphasize the team, the renaming of the funds, the integration of subscale funds, all that stuff's been done. We do have a new integrated research platform. We do have a new head of risk and portfolio analytics. As I mentioned on an upcoming call, I'll talk more in detail about what we're doing on ESG, how we're thinking about private markets on the back of the success that we've had in liquid alternatives, and also how we're evolving our platform to be much more tax efficient. Everything that we were talking about and thinking about pursuing is so much easier now that we've made the structural changes. Because if we were thinking about something like ESG or tax efficiency two years ago, we would have had to do it individually at each boutique, which might have been a very different approach and framework to how we would think about it at the collective level. So you think about the confusion for clients, the duplication, the waste associated with that versus doing it once and doing it well. And I think that the part I'm excited about is if you look at the impact associated with those changes for our clients, Our flows improved last year in asset management $9 billion. Q1 was very challenging, as we mentioned. Redemptions in asset management on the mutual fund side declined by 50%. And our performance against our peers has nearly doubled. So I feel like we're really well set up for success, but the team is working very, very hard to continue to drive differentiation relative to others in the market.

OK. And then on the CI private wealth IPO, I guess, what's your update? What percentage of CI private wealth do you own today? And then when you say you intend to sell up to 20% of this business, are you referring to 20% of your stake or listing the equivalent of 20% of the overall CI private wealth entity?

Sure. So on the first one, we haven't disclosed CI's individual ownership. I also don't think it's – terribly relevant metric just for two reasons one the partnership is incredibly valuable and individuals themselves have a significant amount of their their net worth allocated into this partnership which is a huge testament to what we're building in the conviction that these individuals have secondly we are only disclosing in our financials our representative share of the ownership so there's not a lot of associated noise with that and then third every transaction is a little bit different. So we do expect our ownership to bounce around a little bit up and down based upon various constructs of different transactions, whether it's cash to take out passive investors, whether it's an increase in CI private wealth, depending upon demands from partners and stuff like that as well. When I think about taking it public, I guess your second question, it's going to be our stake that takes public. So the private partnership will continue to exist with those private partners. We'll remain as partners in that partnership model when the company is newly listed.

Okay. Perfect. If I could sneak in one more. I noticed SG&A on the asset management side dropped pretty significantly. materially quarter over quarter. Was there anything notable driving that?

Hi, it's Graham. Nothing notable. You know, again, it's part of our continued effort at looking at our cost base, being able to find efficiencies and having that flow to the bottom line. So just our continued effort to manage costs, but nothing notable to highlight.

So is that a reasonable run rate? given current market conditions and asset levels?

Given current market conditions and asset levels, I think that's a fair run rate for asset management.

Great. Thank you.

Thank you. Again, if you would like to ask a question, please press star then one. We now have Tom Matkinen from BMO Capital Markets. Please go ahead when you're ready, Tom.

Yeah, I got on the call late here, so thanks for taking my questions. Just with respect to slide 13, not sure if you talked at all about the flows in asset management. Periodically, you update us on flows on wealth management, both in the U.S. and in Canada. Is there anything you can describe in that regard with respect to flows you saw in the first quarter and in April?

um so uh as it relates to the first quarter tom uh we disclosed the flows in asset management being negative um we did make the statement that as a company we were flow positive right so if asset management's flow negative obviously our wealth businesses uh led by our u.s business would would have been uh flow positive at a level that offset um what we redeemed in asset management as it relates to ongoing flows. We won't be providing wealth flows in the same format as asset management flows. The industry is a little bit different. The flows are lumpier. We will absolutely be providing clarity on flows, as we have done periodically. The way that we've been thinking about flows is different, I guess, from sometimes how the industry thinks about flows. So we're just looking at net organic growth of client assets. But I think as we get closer to the IPO will align on a consistent format, a consistent timing for disclosing those flows. But in Q1, our wealth businesses were very strongly, positively flowing.

And how did that look in April?

We haven't disclosed April.

Okay. And if I look on slide 10 while you're accounting for CIPW, so what we're going to find here is an increased compensation expense I'm not sure how we should be looking at that increased compensation expense. You know, are the CIPW partners, their ownership stake in here would be in that. Would it be suffice to say that we take somewhere around 20% of the U.S. wealth management pre-tax earnings, and then that would be the incremental compensation expense associated with this non-control?

That will give you a rough estimate, but I would just caution you. Remember, our U.S. business not only includes our RIA platform, but also includes additional businesses that we have in the U.S., particularly the alternative platform. So it's just not the U.S. RIA business. So hopefully that helps a little bit. You know, again, in our adjusted numbers, we backed out all of this accounting noise related to CIPW so that hopefully it provides you a better transparency on sort of the clean numbers.

Okay. All right. Thanks for that.

Thank you. As we have no further questions registered at this time, I would like to remind you that is staff followed by one to ask any more questions. We have had no further questions registered at this time, so I'd like to hand it back to the management team to close.

Thank you, everyone, for your participation in today's call. We look forward to speaking with you next quarter.

Thank you. This does conclude today's call. Thank you again for joining.