Power Corporation of Canada (POW) Earnings Call Transcript & Summary

Well, good morning, ladies and gentlemen. Very pleased to have Jeff Orr, the CEO of Power Corporation of Canada, I keep on wanting to call you Power Group, I apologize that if I slip up. But Jeff, first time at our conference. Thank you very much for joining us. That's my pleasure to be here.

Thank you very much, John.

Now Jeff, as some people in the room may not be overly familiar with Power. I was hoping that we could just start off with you talking about the organization and what you've actually been trying to accomplish over the last several years.

Yes, thanks. That's -- we are a little bit different than other companies. So it might take me a few minutes just to kind of set the stage. So first of all, Power Corp is a publicly listed company in Canada. It is controlled by the Desmarais family. The second generation has been running and in control going back to actually the mid-'90s when they play the more active role. Third generation is in the company. Mr. Desmarais Senior was an entrepreneur, started with nothing and ended up becoming one of Canada's wealthiest people. It's an incredible story. I could spend the entire time just talking about the early days. The business, therefore, is -- was public, is very long-term oriented because we have a family that has got a long-term perspective, and we tend to be a more long-term investor. We are -- I like to describe us as the largest financial institution that nobody's ever heard of. And the reason for that is our structure is, we operate through a small number of public companies that were the controlling shareholder of Great-West Lifeco, IGM being the two most significant. We've owned them for over 50 years, and we work with them to build up businesses. And therefore, a lot of what we do is under the name of Power. And secondly, we have a strategy unlike, I guess, maybe the major banks and many FIs that we will tend to use local brands and not rebrand everything, whether it's Great-West Life or IGM. So for example, people wouldn't know or may not know, we're the second largest 401(k) provider in the United States through Empower. It's about 30% as of last quarter of the business of Great-West Lifeco. We've got 18 million Americans following Fidelity. And -- but people -- that's Empower in Canada were Canada Life and were IG Wealth. So we're Irish Life or Canada Life in the U.K. So we operate under various brands. And so Power is not a name that people recognize. Next, in Canada, just describe a little bit what we do. So we're insurance, wealth management, asset management through individuals, primarily through financial advisers, our own and third party and then through group channels, which is a very -- we've got very big positions in the group markets and the markets where we operate. We are in -- our businesses are in Canada, the United States and in Europe through England, Ireland and Germany. And we've got a long-standing relationship in China where we have a slightly different strategy where we're -- we own 28% of China Asset Management, which is the -- with CITIC, the Chinese government's main holding company who is our long-term partner for the last 45 years. But the main focus is on the 5 on Canada, Europe and the United States. And where we operate, we seek to be leaders. So in Canada, the banks would own 75% of the financial service market. Between what we have in Great-West Life and IGM, we would be the next largest group, annual life of the sound big competitors, but everybody in Canada, I've already mentioned what we have in the states. We'd be the leading group insurance company in the United Kingdom and the fourth largest annuity provider in Ireland, we basically are a leader in every sector of financial services. And we have a lightly wrapped guaranteed fund business in Germany that was started 20 years ago and is now -- we look at it as this little thing, but it's earning actually about CAD 150 million after tax. In total, we have CAD 2.9 trillion. So that's well over to U.S. on our platforms. And so we've got big reach, we have big distribution. And while we operate with different companies in different brands, there's a lot of cooperation on the distribution side. So there's a lot of -- we're always working across the group companies to look at distribution. So that's kind of in a nutshell what we are and how we're controlled. I'll throw it back to you, so I don't make this a soliloquy here.

Well, no, that's great. And you've got -- as you alluded to, you've got your fingers in a lot of going on, anything else like that. One of the things that I think that you personally been working towards with Power is your value creation strategy. So can you talk about what you're trying to accomplish and what you have managed to accomplish and maybe what's on the horizon moving forward for additional value creation?

I'd love to maybe, what I'll start with is a little bit of a historical value track record because it sets the stage or what kind of was unleased about 4 years ago. The Power Corp story is one of creating great shareholder value over time and then getting into a period where we kind of misstepped and had to do some catch-up. And I'll tell that story. And I've been part of that story either as a financial adviser or as part of the group now for 22 years, but for many years working on their transactions. So if you go to 2007, at that point, Power Corp and our main companies had created what Barron's did in the 2008 article, said the Desmarais Power or the Warren Buffett of the north, only more successful, they have a better track record. And we have a 20-year total shareholder return for Power, Power Finance for Great West, that was 21%, 22%, 23% over 20 years compounded. Not like -- nobody had done that, and we did all the research. So we think we're the best financial institution in the world and I think then the Crash came and one of our hallmarks is that because we are very risk-aware. We take our risk in M&A, which we're very active, but balance sheet risk, mismatch risk optionality, we're all over it. So the Crash came and were rock-solid. We didn't miss a beat, Great-West Life, which is 65% of the value of Power Corp, never lost its AA rating from S&P. We think it's the only public life company that didn't lose this credit rating through the financial crisis, Northwestern and Mass and some of the mutuals in the U.S. So by 2010, '11, we're kind of walking around. We were good in the upmarket, and we were fantastic in the down-markets. We started to realize we probably had under-invested through all the M&A activity, under-invested in people, under-invested in technology. We love small and mid-market companies and we had pretty big margins and prices and the topline has started to flatten out. And what ended up happening is, wow, we got to really catch up here. We're actually a little behind in some of the organic investments. And our earnings flattened as the topline has flattened out and our expenses started to go up because we're saying we got great franchises. We're going to invest to make them good for the long term, and therefore, our margins came down. You get flat earnings, multiple coming down. And by 2018 or so, stating the articles that Power Corp's lost its touch. And it must be the second generation because the first generation, Paul Desmarais Senior, would never have messed it up like this, not that we blew it up. But the company didn't -- the company didn't go down, earnings weren't down. They were up slightly, but basically, we lost our growth. Okay. So now I can answer your question after what's the value creation. So we have been a conglomerate at Power Corp, but financial services had become about 75%, 80% of what we've done through our vehicle Power Financial, which we launched public in '80. And the Desmarais are proud people, and we're all proud. And we've all been on the journey here and we're seeing it ongoing. What can we do? What should we do? Because we're not -- we are here to make money for shareholders. And so we had a lot of sessions, Greg tracks the accuracy, he's there in the front row. And the Desmarais bought in, in the action. We're going to go pure-play Financial Services. We're going to collapse a number of public companies that are -- market has been the highest, is redundant and overcomplicated and we're going to simplify what we do, and we are going to go out and talk to the market, talk to shareholders what we're going to do, and we're going to turn it into a pure play. And that has unleashed -- the last 4 years have just been -- we've done that with a massive amount of M&A activity repositioning the companies. And whenever I tell the value creation story, I really start with 80% of our values are Great-West Life and IGM, and they're almost 100% of the earnings. The rest of what we own is more NAV-based as opposed to earnings-based. So getting that 80% right is the core to what we do. And we have basically repositioned Great-West Life in those 4 years through 5 deals. We just sold Putnam Investments, which we've owned for 16 years to Franklin. We've got a distribution partnership there, we can talk about that. In Empower, we bought MassMutual and Prudential's business, and we bought Personal Capital, which was a digital wealth manager that we have been backing and plugged it into Empower, reposition Great-West Life as basically a very high-growth DC and wealth management provider while over at IGM, we have repositioned the company so that we are now IG Wealth and Mackenzie, which is the old Ameriprise in Canada, Mackenzie substantially retooled for organic growth with strong positions for growth in the United States where we have just acquired 20% of Rockefeller, which you may be aware of here in New York, which is our good old friend, Greg Fleming, who is very close to us is basically creating a premier high-end, high net worth brokers -- high net worth firm and family office company that's just a block from here. And we've been working with him for a long time as private equity is behind that. So we're just about 20%. So IGM got a great strong position growth vehicle in the United States, and it also owns 28% of China Asset Management. John is going through obviously some struggles right now, but we're long-term investors and I think we're well positioned. So the 80% of the business is public Great-West Life, IGM, strong organic growth and strong M&A has repositioned the business for higher growth. The rest of the story is surfacing value that the market doesn't appreciate and doesn't understand because, quite frankly, we made it too complicated. And what we're trying to do is sell everything that's nonfinancial services. We had these great strategies that were created for our own balance sheet at Power Corp in all kinds of different areas, and we're turning those into alternative asset management businesses. So from outstanding start several years ago, we have CAD 20 billion under management, CAD 2.5 billion of that was our own capital 5 years ago, CAD 2.5 billion capital is what we have in our own capital in it today. In other words, we said to those people who run our business, which are the third generation. It's a small part of us right now. You go and build those businesses, but we're going to just recycle Power's capital. We're not putting more capital in, you do it on third-party capital, and we've had tremendous growth. So I'm going to come back and maybe summarize -- not summarize the whole topic, how does that all create value. The value creation story is the following going forward. We have higher organic growth at our Great-West Life and IGM subs, we think the market is paying for. Great-West Life has talked about its earnings prospects and has been delivering on them. IGM is going to release earnings guidance at their upcoming investor conference. So we think there's strong organic growth. We have a very strong proven track record of adding to that through M&A. And if you look in our brochure that's attached, you'll see 21 transactions we've announced in the last 3.5 years. We're -- and we're not too tired. We still have lots of energy. So we add to that through M&A. And then the icing on the cake is up with Power Corp. We are surfacing value in the assets that people don't understand -- don't appreciate and we're, in effect, surfacing value and through communication and buying shares back as we trade at a discount, we're narrowing the discount. And when you -- all those 4 ingredients, high organic growth, the subs, active M&A and then at the Power Corp level, surfacing value, buying shares back, arbitraging the discount, you end up with a pretty good total shareholder return story. Since we launched it, we hope for over the last 5 years, we've outperformed our major Canadian benchmarks, the broad index of the Financial Service Index on a 1-, 3-, 5-year basis. And we're still -- our multiples haven't really changed. We're still -- companies are trading at kind of 10x earnings. And given our growth prospects, we think there's lots of value creation going forward. So that is the value creation -- I just said in a nutshell, but I didn't actually describe it in a nutshell.

Well, it's okay because as I've been following Power for several years now, it is not a simple story. And that is one of your challenges and Jeff, I know that the pushback that you probably got on a fairly regular basis is the holdco structure. And now you collapse Power Financial and the Power Corporation. I think it was a very logical and step that was demanded by The Street, whether or not Desmarais or family philosophically agreed with it anyhow that went through. But can you talk about the corporate holdco structure that you have in place? Because as you go down, there is voting control, largely economic control in each thing, but you do have minority interest that's found out in the marketplace for each of these major entities. And what is the philosophy behind that? Where are the advantages the Power has behind that? And is there anything that might change behind that in terms of prioritizing some of the subsidiaries?

Yes. So it was initially done because those companies were not part of Power and Power went out. And I just gave you the history, Paul Desmarais started with nothing, and he ends up controlling some institutions in Canada. And so acquiring 100%, you got to the point where you control them and how you control them, and that was the model. And so it was a capital-raising strategy initially because control is up at the top of Power Corp. That remained in place, but it ends up having some advantages and some disadvantages. The complexity is, for sure, the disadvantage. We are able to, I think, create different environments and attract management and attract capital in the different vehicles. So Great-West Life, most of its businesses are regulated by OSFI and by the state regulators in the U.S. and by the PRA in Europe. And that's a regulated entity, IGM is not. You get a different culture at IGM. You get a different pace of decision-making, which is appropriate. It's not a balance sheet business that doesn't have the same risk. So look at the talent and you're familiar, maybe people in the audience here are not, but looking to tell we have an IGM and all the talent we build to attract in the last 3, 4 years. It's a different kind of crew and culture. So there are cultural advantages. I think there are disadvantages and dissynergies in size. And we have this debate all the time. I don't -- what would be the advantages of folding everything together? I think big companies get so big that they lose their ability to focus on all of the businesses, and they look at the entrepreneurial ability to [indiscernible] quick. And we have not only kept our businesses small, I mentioned multi-branding. We have -- we run our companies not all with the Board on the top. We run our companies with local boards and have -- we tend beyond them and Power will be -- and I'll tend beyond them. And Greg and the Desmarais will be on the major ones. We're not -- our philosophy is not centralization. It's kind of in our ethos of having decentralized businesses, get people cooperating on distribution, but rolling everything together into one big company, creating a great big kind of bureaucracy and then thinking you're going to compete and be effective. It's just not the way we think and John reminded me when we were both -- I was -- I ran the investment bank at Bank of Montreal for many years, you were at BMO at the same time. And that's a wonderful place but it was -- it's a different decision that you bring along. It's a different culture than we created. So cultural regulation and capital raising is the main reason the structure exists. And if you pull it all together, you end up with a very different company. You also end up with Power probably losing control at that point when you think about it. So those are -- I spend my time focusing on what I know I can get done. That's a better answer to your question. And I know there's a lot of value creation we can do in our current structure, and there's lots of low-hanging fruit, and we are focused on getting to the bottom-line answer.

Jeff, one of the things that you've mentioned, M&A as a strategy and your background as a banker, it makes a lot of sense. One of the things that I've noticed with Power when they -- when you do your M&A, it's a little bit different. It's more, I'm going to say, relationship-based and not on every transaction, but you're going through. What -- when you're making a decision or you're helping your subsidiaries make a decision, how do you actually -- what's your course behind attracting -- finding a target, assessing the possibilities of the viability of the transaction?

Everything we do is to build a stronger market position and get either distribution or cost synergies out of the transactions. And because -- although we sound complicated, we're actually not in that many businesses like we're in 2 channels. We work through Financial Advisers into individuals, and we work through corporations, and we have emerging digital channels. We have Wealthsimple with Robinhood of Canada. We've got digital at this point, while we have 2 channels. And we're in 2 or 3 kind of markets we have, insurance and savings and helping people through retirement. So we know who -- our logical fits to the companies, and we go out and we try and create relationships over time with the companies that would be logical fits, and we don't know them all. But -- and then we are very, very long-term shareholders. So when we get engaged to companies, we are a good owner and we are able to walk in through M&A and say, not only do we have a strong balance sheet, a very strong balance sheet, kind of it aligns without being precurative but we can put this in our Visa card, like don't worry about the financing, okay? It's fine. But we also can talk to CEOs and Boards and say, look what we've done as an owner, the way we have built the businesses made them stronger companies, treated the people well. And a good example of that, and it's going to sound funny for me to say, it is Putnam Investments. The market would -- certainly, our shareholders would say universally, that was the worst transaction we ever did internationally. Probably, it was the worst transaction. We owned it for 16 years. We bought it in 2007, terrible timing, and it had gone through market timing scandal, it had performance issues, and it was a fixer up, if I can say it that point and we said, don't, what we said to the Board of Trustees. We said to the people, we're long-term shareholders. We're going to come in here, create a great environment for people to come in and do their best work. We're going to put an investment performance first and then the money will come. The flows will come. We're going to do the right thing. Sixteen years later after having had eggs thrown at us for a long time because we never got the thing to profitability because it's been a tough place to be in active retail management in the United States in the last 16 years but the company has the best performance track record in Barron's for the last 10 years, absolutely number one -- it's number two, number one is a multi-manager sub-advised model. We did the right thing. And ultimately, the company wasn't making any money and we've now created a long-term partnership with Franklin where we're going to take shares back, and they're going to distribute on our platforms because we have big platforms. We've done the right thing with Putnam and we did the right thing. We built a great business and Franklin is so fortunate and sees what they bought. So that, to my mind, is a story of a deal that worked out poorly for Power Corp and for Great-West Life and its shareholders financially. But we're going to walk around for the next 20 years and say, even when the tough going gets tough, we're a good buyer. Actually strong, we create synergies and we're responsible owners, and you want to do business with us. And that resonates. So when we're in negotiations and on the large ones, Power will help Great-West Life or IGM in the negotiations and in getting the transactions done. We're able to look at Boards in the face and CEOs and say, you want a responsible buyer, we're a long-term responsible buyer, and it helps the margin. It's a differentiator.

Well, Jeff, I've hogged the puck and you see if there's actually any questions from the audience before I carry on? No. Okay. Oh, sorry.

Yes. I know a little bit about your capital structure, but I just wanted to ask you how you think about the Great-West relationship and the dividend stream paid to the holding company and then the capital structure at both Power Corp relative to Great-West, if you could explain that relationship a little bit better. It would be helpful.

Well, make sure I'm clear on the question. So the capital structure at Great-West Lifeco and the dividend policy. And then the part about Power Corp's capital structure, I just want to make sure I'm clear on that.

Well, is there a necessity for a certain level of dividends that you've seen to support the capital stack of Power Corp promising?

Okay. Good question. So dividends are important to our group, and we have had Great-West and IGM and Power Corp pay dividends for decades and decades and decades. And they, in fact, had an unbroken track record of increase every year [indiscernible] prices, there was a [indiscernible] for about 5, 6 years at Great-West Lifeco and therefore, Power dropped the dividend, but never had a decrease. It is important for our own shareholders and our shareholder base, the Desmarais like the dividend, too. I won't say that the Board meeting that -- and so the current 2 controlling shareholders are Paul and Andre, who were the CEOs of Power Corp up until the reorganization 4 years ago. And I once joked when they asked me for the recommendation on the dividend that I wasn't sure whether we pass the dividend at this point. And Andre pulled the cell phone out and he said, you called my mother, okay? Because I'm not going to. The Desmarais family, the dividend is important to them. The public shareholders, the dividend is important to them. The -- so I don't see Great-West Lifeco in a position where it's going to pass on a dividend, that's pretty satisfying and it's in a very strong financial position. I don't see that you need a pretty strong circumstance for that not to be paid. When you get up to Power Corp, we have limited leverage. There's some financial leverage. It's in the form of perpetual preferred shares. And there's -- I think there's $200 million of debt on our -- the asset value is $30 billion, $35 billion of assets like it's pretty miniscule and the press we have are perpetual and they're noncumulative. So if we did pass a dividend, and all of a sudden, a financial crisis happened and, let's say, the regulator said to Great-West Life and IGM whatever you can, not that they're regulated. Let's say the dividends got cut off. We would be able to pass on our preferred dividends and not go into bankruptcy, and we did for years. But you're now talking about a pretty dark situation. So it's -- so -- but having said that, the dividends from our subsidiaries, Great-West and IGM are the primary cash flow at normal state. If you do our cash flow, the primary cash flow that we have is the dividends coming in from our major subs. So I kind of went around the issue there. They're reporting to the Power Corp stores the capital. We're really, really [indiscernible] and the structure that we have at Power Corp, it's hard for us to see how it go into default given instruments, but I -- but the dividend is critical to us, and I don't see them. Did that answer your question?

And just to add on to that, Jeff, one of the things that I track religiously every quarter is the cash flow balances. Because Power in your disclosures really is a roll-up of all of the track thing, but it is cash in cash [indiscernible] what is important and your cash balances have -- I guess, [indiscernible] committed being quite steady within the major subs.

Yes. And we have -- at the Power Corp level, since we announced the reorganization, I didn't mention the day, but it was December 2019, we announced we were going to collapse Power and Power Financial. We announced right after that we're going to announce across Pargesa or European moving companies. And we announced a strategy, we have sold over $1.8 billion of assets at the Power Corp level and we still haven't sold the ones that we sort of indicated we were going to at the reorganization. You need to be an active manager of funds, but also -- and we have some industrial companies that rely on electric bust, Lumenpulse lighting and power skate and that was part of the diversification strategy. And we kind of pointed to those as things that were really not strategic going forward. That was almost 4 years ago. So you see what the heck is going on. Well, COVID came and lighting business went down and the EV boom took off and really $50 million we had and rely on Electric is also worth $1.5 billion, but then the EV market crash and then you couldn't even give the self away and they needed capital. So you have to pivot in your strategies, but we still surfaced $1.8 billion of other assets that we have that we've been able to sell and then buybacks and we're still sitting on a bunch of cash to do more buybacks. I didn't get to the discount. We're going to come back to that, by the way. The -- so we are still -- in addition to the dividends, that we get from Great-West and IGM to follow up on that theme, we are in the process of liquidating assets here and in selling them and the primary use for that in the absence of agree with Lifeco, IGM needing capital for some big deal which will always be the priority, and we've done that kind of 5, 6 times in the last 25 years. Like right now, we're trading at a 25% discount to our net asset value and we'll buy shares all day long when we're buying our assets that we know and love and believe in that $0.75 on the dollar.

Then let's talk about the discounts and everybody on The Street tracks your NAV and where Power is trading. And we have discussions with the Board, is there a target to have in place? And what other levers do you think in the poll to try to reduce that [indiscernible] company?

Yes. So great question. It's -- we don't have a specific target. I'll say exactly what I've said to the Board. Our discount historically, we actually traded at a premium at one point and when we were doing accesses in the late '90s and 2000, it has greater liquidity either great with IGM. Sometimes people want to come in position and they go into Power Corp. And we were actually trading at a premium. I don't expect us to trade premium but maybe. The second building block I'll mention is that when you -- we have in our net asset value is not in the number, but we do have expenses at Power Corp. And when you take a present value that you could get 2, 2.5, 3 to 3.5 depending on your assumptions of the NAV is say, well, I'm not going to pay for that because there's an expense stream here that is just kind of a negative net present value. So I can kind of go theoretically, we should be at 2 or 3 but not more than that. And we've got greater liquidity and low operating leverage. And so there's lots of reasons maybe you buy our stock. But historically, we had traded for a long time in the 15 range. And then we gapped out [indiscernible] earlier in 2013 to '18 when we started to go sideways, we gapped up to about a 35% discount. We stayed there for about 5 years -- last for 5 years in all of the activity, we were down to 17% last year and moved back to 27% that we're down now around 25%. So it's been -- it jumps around. So that's all context for you. I say to the Board, I don't know why we can't get it down to the mid-teens. And what are -- in your last part of your question was what are you doing about it? We are simplifying. We're only halfway through the journey of simplification, we are speaking to investors about the opportunity, and we're buying stock back as quickly -- as soon as we can when it's at a discount. And I think ultimately, there will be greater faith in the strategy and the discount will reduce. And let me give you a comment on the faith in the market. There's still residual skepticism about whether what we are doing is sustainable, I think, in the market. One of the evidence of that is [indiscernible] guidance 2 years ago, I said it's going to do so at the analyst investor conference. When I look at the analysts on The Street and I never put research and was down [indiscernible]. But when I look at the research analysts who are covering Great-West Life, for example, 65% of our asset value is at 70% Great-West Life. They are -- all of them have the lowest earnings both in 2024, of all the companies they cover, the earnings if you kind of back into 2023's earnings from Great-West is running right now, it's lower than Great-West [indiscernible] this skepticism, at least at the analyst level about whether the earnings growth are real. And I don't criticize that. I go fine, we'll just keep delivering. And eventually, there's going to be greater confidence that what we have been saying is actually sustainable. And when that happens, I think subs may trade at better multiples, but I also think Power Corp itself will continue to build this reputation and the discount should come down.

Anything else from the audience? Well, Jeff, we've got a very good discussion in terms of what you're accomplishing. But what's the next stages for Power? What's your vision for Power moving forward? And I'm not talking the next 2 years, but 10 years down the road when you're halfway through the tenure.

Oh, no. That's -- I don't like the end of that question. The -- okay. So IGM and Great-West Life, we're going to continue to build organically, and we'll continue to look for opportunities to deploy capital. So I could talk about that. But capital -- because part of your question is capital deployment. And I think a priority for Great-West Life will continue to build out what we have in the United States at Empower in the defined contribution. I'll just take a minute on that. The defined contribution business in the United States, 50 players got into it and got into record-keeping so that they could do what, they could sell product. They're a mutual fund company so you can sell your funds, if you're an insurance company, you're selling annuities and general account product. Game kind of changed in a number of ways that the penetration of proprietary product reached a point where it was at a maximum and with all talk about fiduciary duties, et cetera, in the United States, matters turning to reverse, passive is coming in and taking more share. And at the same time, technology and the demands of consumers and employers over what kind of experience we're going to get, meaning you want to have a fantastic digital experience. There's no way 50 record-keepers can do that, participant-wise. So that's been our theory for 16, 17, 18 years since we started to say, we want to consolidate this market. So we have got ourselves in Fidelity and a few others have got great DC platforms. We have 18 million people on our platform. We spent $100 million on a system. We divide by 18 million. Principals got 9 or 10, and then you're at [indiscernible] down the line. So record-keepers are going to continue to yield on at some point. We don't even love record-keeping. We use record-keeping as a tool. We are building a wealth management business through Power. And it is in plan as people turn on advice that we provide in a digital format. We've got the personal capital tools coming into that. We do have our own proprietary product that we're pretty low in our proprietary product. We have lots of room to grow, and we are building a wealth management business, which is now at $80 billion of AUM, pretty small, but outside the back end, Power has got USD 1.4 trillion on the platform. 6% comes out of plan every year, people retire or they move and we are building a wealth management around the personal capital tools and what we had and is growing very rapidly. So we're using recordkeeping as a tool to consolidate the industry and we'll continue to do that while we're building an advice model in plan and wealth management business as an adjacency. That's the most exciting thing we have going across all of our group, and it's 30% of Great-West Life right now, and it will be bigger, what it's going to be in 3 years or 5 years is going to be bigger. So we'll put capital into doing that at any time. IGM, we will continue to build out their wealth platform in Canada, but there's opportunities in the United States that are primary to deploy capital. Wealth will get bigger. And at the Power Corp [indiscernible] in the alternative asset management businesses, which now have CAD 20 billion under management, through strategies are at profitability and contributing money, and they are contributing to Power being not 80% of its value being earnings-driven and 20% being NAV but Power being 90% earnings-driven and 10% NAV, and that's also what reduced the discount because I think our hybrid valuation. So bigger, simpler and more earnings-driven is what the company is going to look like.

And as you align your focus on Financial Services and solely fund mutual services, is there any desire to broaden out what you're all [indiscernible]?

If they're adjacent and there are -- and it's synergistic and we can do it on an economical basis. We would have loved to have been in the deposit banking business so that we could be, particularly in the last [indiscernible] months but not a mid-tier player, right? I mean, so it's just interesting. 1989, Power sold Montreal Trust, we ended up with Bank in Nova Scotia. I was part of those discussions as a young banker, because Power said, we're not going to be competitive in the deposit-taking business. We're too small. And every time you get into crisis, one problem with the institutions and we go under. What just happened in the United States in the last 12 months, we have made a conscious decision to exit the positive because we lack scale and we lack the breadth deposits and going to end up attracting hot money or institutional money and it goes. So there's an area I'd love to figure out how to get into banking, but I don't need to see it happening because in order to be competitive, you have to be that big. So what are the adjacencies? Digital is opening up a lot of cost stories. I'll go there for a second. When we started on the journey of consolidating the DC business, was back again 18 years ago, we didn't fully appreciate that it's going to become an individual relationship. We kind of had it but not really. And so now that everything is done digitally, we used to think of it as a relationship with the adviser and you send the -- and the individual employee, their statement once every quarter, we're talking to those people digitally all the time because [indiscernible]. Now we have 18 million people that we're talking to. And by the way, the 3 group player in Canada. We're #1 group player in Ireland. We're the largest group employer insurance company at Canada Life. We have a big group businesses. What can those digital -- let's turn it to over the next 5, 10 years. I have [indiscernible] and we'll begin to explore that.

Interesting. Well, Jeff, we're out of time. I can chat with you for hours, but thank you very much coming to the conference.

John, thanks to you. Thanks to Barclays, and thanks, everyone, for your attention. Really enjoyed it. Thank you.