I'm good to go. Yeah, fantastic. Okay. 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, and I apologize that if I slip up. But, Jeff, first time at our conference, thank you very much for joining us.
It's my pleasure to be here. Thank you very much, John.
Now, now, Jeff, as some people in the room may not be overly familiar with Power, 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.
Yeah, thanks. That's, w e 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 is been running and in control, going back to, actually the mid-1990s, when they played a 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, well, is 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.
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 we're 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 not 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 Lifeco 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, t hat's Empower in Canada, we're Canada Life and 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 to in Canada, just describe a little bit what we do. So we're insurance, wealth management, asset management, through individuals, primarily through financial advisors, our own and third party, and then through group channels, which is a very, w e've got very big positions in the group markets and the markets where we operate. We are in, o ur businesses are in Canada, the United States, and in Europe, through England, Ireland, and Germany.
We've got a long-standing relationship in China, where we have a slightly different strategy, where we're the, w e own 28% of China Asset Management, which is the, with CITIC, the Chinese government's main holding company, who's our long-term partner for the last 45 years. But the main focus is on the five, 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 at Great-West Life and IGM, we would be the next largest group. Manulife and Sun are big competitors, but they're big 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. 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, you know, well over $2 trillion on our platforms. So we've got big reach, we have big distribution, and while we operate with different companies and 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, no, that's great, and, and, you, you've got, as you alluded to, you've got your fingers in, a lot of, a lot of going on, everything else like that. But one of the things that I think that you've personally been working towards with Power is your value creation strategy. So can you, can you talk about what you're trying to accomplish and what, what you have managed to accomplish, and maybe what's on the, what's on the horizon moving forward for, for additional value creation?
I'd love to. Maybe what I'll start with is a little bit of our historical value-
Mm-hmm
... track record, because it sets the stage for what kind of was unleashed about four 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 advisor, 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 a 2008 article said, "The Desmarais Power are the Warren Buffett of the North, only more successful.
They have a better track record." And we had a 20-year total shareholder return for Power, Power Financial, Great-West, that was 21%-23% over 20 years compounded. Nobody had done that, and we did all the research and said, "We think we're the best financial institution in the world," kind of thing. 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 we're rock solid. We didn't miss a beat. Great-West Life, which was 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 its credit rating through the financial crisis. Northwestern Mutual and MassMutual and some of the mutuals in the U.S. did. So by 2010, 2011, we're kind of walking around. We were good in the up markets, and we were fantastic in the down markets. We started to realize we probably had underinvested through all the M&A activity, underinvested in people, underinvested in technology. We loved small and mid-market companies, and we had pretty big margins and prices, and the top line started to flatten out. What ended up happening is we went, "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 top lines 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 multiple came down. We get flat earnings, multiple coming down, and by 2018 or so, there's starting to be articles that Power Corp's lost its touch. And it must be the second generation because, you know, the, 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 it basically, we lost our, lost our growth. Okay, so now I can answer your question after... What's the value creation?
So we had been a conglomerate at Power Corp, but financial services had become about 75%-80% of what we'd done through our vehicle, Power Financial, which we'd launched public. The Desmarais are proud people, and we're all proud, and we've all been on the journey here, and we're sitting around going: You know, what can we do? What should we do? Because we are here to make money for shareholders. So we had a lot of sessions, great accuracy here in the front row. The Desmarais bought into the notion we're going to build pure play financial services. We're going to collapse a number of the public companies that are... That the market has determined is are redundant and overcomplicate the story.
We're going to simplify what we do, and we are going to go out and talk to the market, tell shareholders what we're going to do, and we're going to turn it into a pure play. That has unleashed the last four years; it's just been, w e'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 four years through five deals.
We just sold Putnam Investments, which we've owned for 16 years to Franklin, and we've got a distribution partnership there. We can talk about that. In our, in Empower, we bought MassMutual and Prudential's business, and we bought Personal Capital, which is a digital wealth manager that we had been backing, and plugged it into Empower. Repositioned Great-West Life as a 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, owning 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 the premier high-end, high net worth, you know, brokerage at, well, brokerage high net worth firm and family office, company. We're just a block from here, and we've been working with him for a long time. His 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. China is going through, obviously some struggles right now, but we're long-term investors and, and I think we're well positioned. So the 80% of the business that's public, Great-West Life, IGM, strong organic growth and strong M&A, have 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. What we're trying to do is sell everything that's non-financial services. But 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 a standing start several years ago, we have CAD 20 billion under management. Two and a half billion of that was our own capital five years ago.
Mm-hmm.
2.5 billion is what we have in our own capital in it today. In other words, we said to those people running the 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.
Yeah.
Not summarize the whole talk, but where does - how does that all create value? Yeah, the value creation story is the following going forward: We have higher organic growth at our Great-West Life and IGM subs than we think the market's 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 they're 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 here, you'll see 21 transactions we've announced in the last 3.5 years, w e're not too tired. We still have lots of energy, so we add to that through M&A.
Then the icing on the cake is up at 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 then through communication and buying shares back, 'cause we trade at a discount, we're narrowing the discount. And when you, a ll those four ingredients, high organic growth to the subs, active M&A, and then up 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've outperformed. Over the last five years, we've outperformed our major Canadian benchmarks, the broad index, the financial service index, on a one, three, five-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, lots of value creation going forward. So that is, that is the value creation. I was going to say in a nutshell, but I didn't actually describe it in a nutshell, did I? But-
Well, it's okay because as I've, b ecause I've been following Power for several years now, it is not a simple story, and that is one of your challenges.
Correct.
Jeff, I know that the pushback that you probably get on a fairly regular basis is the holdco structure. Now you collapsed Power Financial into Power Corporation-
Yeah.
-which I think was a very, logical and step that was demanded by the, by Street. Whether or not the Desmarais family philosophically agreed with it, anyhow, that's... 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-
Yeah.
That's planted in the marketplace for each of these major entities. And what, what is the philosophy behind that? What are the advantages that Power has behind that? And is there anything that might change behind that in terms of privatizing some of the, some subsidiaries?
Yeah. So, you know, 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, you know, some big institutions in Canada. And so acquiring 100%, it got to the point where you controlled them, and now he controlled 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 has 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, you know, 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 it'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.
Mm-hmm.
It's not a balance sheet business. It doesn't have the same risk. So look at the talent, and you're familiar, maybe people in the audience here are not, but look at the talent we have at IGM and all the talent we've built, we've attracted in the last three, four years. You know, it's a different kind of crew and culture. So there are cultural advantages. I think there are disadvantages and dis-synergies in size.
Mm-hmm.
We have this debate all the time. Why don't, y ou know, 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 lose the entrepreneurial ability to pivot and be 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 at the top. We run our companies with local boards and have. We tend to be on them, and we'll be, we'll have. And I'll tend to be on them, and Greg and the Desmarais will be on the major ones. We're not as. Our philosophy is not centralization.
We kind of. 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. John reminded me when we met that we were both. I was at the. I ran the investment bank at Bank of Montreal for many years, and you were at BMO at the same time. That's a wonderful place, but it was a. It's a, it's a different decision-making block.
Different culture.
It's a different culture than we've created.
Yeah.
So, cultural regulation and capital raising is, is the main reason the structure exists. And if you pulled it all together, you know, 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 the 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 it done. That's the real 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. But one of the things that I've noticed with Power, when you do your M&A, it's a little bit different. It's more, I'm gonna say, relationship based, and not on every transaction, but going through. When you're making a decision or you're helping your subsidiaries make a decision, how do you actually, what's your philosophy behind attracting or finding a target, assessing the possibilities or 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. Because although we sound complicated, we're actually not in that many businesses. Like, we're in two channels. We work through financial advisors and to individuals, and we work through corporations, and we have emerging digital channels. That's, we have Wealthsimple, which is the Robinhood of Canada. You know, we got but digital at this point as well. We have two channels, and we're in two or three kind of markets. We help insurance and savings, and we're helping people through retirement. So we know who are logical fits for 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...
Then we are very, very long-term shareholders. So when we get engaged with 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, very strong balance sheet," kind of use the line, you know, without being pejorative, but we can put this on 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." 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 financially.
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 scandals. It had performance issues, and it was a fixer-upper, if I can say, at that point. And we said, "Don't worry." 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 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, you know, had eggs thrown at us for a long time because we never got the thing to profitability, because it was, you know, 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 by Putnam. 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. So we're naturally 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, you want a responsible buyer? We're a long-term, responsible buyer." And it helps the merchant.
It's, it's a differentiator.
Well, Jeff, I've, I've hogged the puck, I'm going to see if there's actually any questions from the audience before I, before I carry on.
Nope.
Okay.
Yep, we got one over here.
Oh, sorry. Oh, perfect.
Yeah, 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'd be helpful.
Want to make sure I'm clear on the question. So you're, t he 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 see to support the capital stack at Power Corp?
I see. Thank you.
Yeah.
Okay.
Thank you.
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 increasing every year, but after the financial crisis, there was a pause for about five to six years at Great-West Lifeco. And therefore, Power dropped its dividend, but never had a decrease. It is important for our own shareholders and our shareholder base. The Desmarais like the dividend, too. I once joked at the board meeting that. And so the current two controlling shareholders are Paul and André, who were the CEOs of Power Corp up until the reorganization four years ago.
I once joked, when they asked me for the recommendation on the dividend, that I wasn't sure whether we'd pass the dividend at this point. André pulled his cell phone out, and he said, "You call 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. So I don't see Great-West Lifeco in a position where it's going to pass on a dividend that's pretty set, et cetera. But it's in a very strong financial position. I don't see, you know, 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.
I think there's $ 200 million of debt, uh, on, you know, on our, the asset value is $30 million-$35 billion dollars of assets. It's like, it's pretty minuscule. And the pref's we have are perpetual, and they're non-cumulative. So, you know, 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't" -- not that the regulator. 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've done it 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. No mistake.
If you do our cash flow, the primary cash flow that we have are, is the dividends coming in from our major subs. So I kind of went around the issue there. They're important to us. The Power Corp source of cash flow, we're really, really, from the attributes and the structure that we have at Power Corp, we—it's hard for us to see how we would go into default given instruments, but the dividends are critical to us, and I don't see them... Am I, am I on you? Did I answer your question?
Well, yeah, and just to add on to that, Jeff, one of the things that I track religiously every quarter is the cash flow balances.
Yeah.
So it, y ou know, because Power in your disclosures really is a roll-up of all of the-
Correct.
but it is cash in, cash out.
You bet.
Is what is important, and your cash balances have, I guess, Greg should be commended of being quite steady and without any major changes.
Yeah, and we have, at the Power Corp level, since we announced the reorganization, I didn't mention the date, 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 collapse GBL and Pargesa, our European holding companies, and we announced a new strategy. We have sold about $ 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 know, you need to be an active manager of funds, but also of businesses. And we have some industrial companies like Lion Electric, Lumenpulse Lighting, and Bauer Skates. Okay, that was part of the diversification strategy.
We kind of pointed to those as things that were really not strategic going forward. That was almost four years ago, and we're there. So you say, "What the heck's going on?" Well, you know, COVID came, and just the lighting business went down, and then, and then the EV boom took off, and this little $50 million we had in Lion Electric was all of a sudden worth, you know, $1.5 billion. But then it, t he EV market crashed, and then you couldn't even give the stuff away, and they needed capital. So you, you have to pivot in your strategies, but we still surfaced $1.8 billion of other assets that we had that we've been able to sell and, and finance 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. You know, 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 of selling them. And the primary use for that, in the absence of Great-West Life or IGM needing capital for some big deal, which will always be the priority, and we've done that kind of 5x-6 x 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 at $0.75 cents on the dollar.
Well, then, let's talk about the discounts-
Yeah.
- and, everybody on the street tracks your NAV-
Mm-hmm.
And where Power is trading. And when you have discussions with the board, is there a target you have in place? And what other levers do you think you can pull to try to reduce that, the discount?
Yeah. So, great question. 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, and at one point, when we were doing exits in the late 1990s and 2000s. Power Corp's got greater liquidity than either Great-West Life and 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 little building block I'll mention is that when we have in our net asset value, it's not in the number, but we do have expenses at Power Corp.
And when you take a present value of that, you could get to 2, 2.5, 3, depending on your assumptions of the NAV and say, "Well, I'm not going to pay for that because there's an expense stream here that is, you know, that's got a negative net present value." So I could kind of go, theoretically, you know, we should be at 2 or 3, but not more than that. And we've got greater liquidity and a little operating leverage, and so there's lots of reasons maybe you'd buy our stock. But historically, we had traded for a long time in the 15 range, and then we gapped out. I was talking about our story earlier in 2013 to 2018 when we started to go sideways.
We gapped up to about a 35% discount, and we stayed there for about five years. The last four or five years in all of the activity, we were down to 17%. Last year, it moved back to 27%, and 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 it's, we can't, we can't get it down in the mid-teens.
Mm-hmm.
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, you know, 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. Let me give you a comment on the faith in the market. There's still a residual skepticism about whether what we are doing is sustainable, I think, in the market. One of the evidence of that is, Great-West Life came out with earnings guidance two years ago, and I said I was going to do so at the upcoming investor conference.
When I look at the analysts on the street, and I've not ever put research analysts down, John. I would not. Yeah. But when I look at the research analysts who are covering Great-West Life, for example, 65% of our asset value is our, is our 70% of Great-West Life. They are... You know, all of them have the lowest earnings growth in 2024 of all the companies they cover. And the earnings, if you kind of back into 2023's earnings from what Great-West Life is earning right now, it's lower than Great-West Life. There's skepticism, at least at the analyst level, about whether the earnings growth are real, and I don't criticize that.
I go, "Fine, we just, we just keep delivering, and eventually there's going to be greater confidence that what, what we are—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 its reputation, and the discount should come down. Anything else from the audience?
Well, Jeff, we've had 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 two years, but 10 years down the road when you're halfway through your tenure.
Oh, no, that's, I didn't like the end of that question. The, okay. So, IGM and Great-West Life are 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 that 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 products. If you'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.
The 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, you know, all talk about, fiduciary duties, et cetera, in the United States, that is starting 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 they're going to get is make meaning. We want to have a fantastic digital experience. There's no way 50 record keepers can do that. There's just no way. 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 and Fidelity and a few others have got great DC platforms.
We have 18 million people on our platform. We spend $100 billion on a system. We divide by 18 million. Principal's got 9 million or 10 million, and then you're at Voya, at 6 million, and down the line. So record keepers are going to continue to yell uncle 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 them in a digital format. We've got the Personal Capital tools coming into that. We do have our own proprietary product, but 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, and Power's got $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 it's growing very rapidly. So we're using record keeping as a tool to consolidate the industry, and we'll continue to do that while we're building an advice model in plan and a 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'll be bigger. You know, what it's going to be in three years or five years is going to be bigger. So we'll put capital into doing that at any time.
IGM, you know, we will continue to build out their wealth platform in Canada, but there's opportunities in the United States, primarily to deploy capital. So those get bigger, and at the Power Corp level, what's the vision? Anything without financial services is sold. The alternative asset management businesses, which now have CAD 20 billion under management through various strategies, are at profitability and contributing money. And they're 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.
As you align your focus on financial services and solely financial services, is there any desire to broaden out in what your offerings are?
If they're adjacent, and it's synergistic, and we can do it on an economical, economical basis. We would have loved to have been in the deposit banking business so that we could be, particularly in the last 12 months. But not a mid-tier player, right? I mean, so just interesting, in 1989, Power sold Montreal Trust, which ended up with Bank of Nova Scotia. And I was part of those discussions as a young banker, because Power said, "We're not, we're not going to be competitive in the deposit-taking business. We're too small, and every time we get into a financial crisis, the money is going to go out with the institutions, and we go under." Which has happened in the United States in the last 12 months.
We had made a conscious decision to exit deposit taking because we lack scale, and we lack the breadth of deposits, so you're gonna end up attracting hot money or institutional money, and it goes. There's an area I'd love to figure out how to get into banking, but I don't really see it happening because in order to be competitive, you've got to be that big. What other adjacencies? Digital is opening up a lot of possibilities.
Mm-hmm.
I'll go there for a second. When we started on the journey of consolidating the DC business, which was back 18 years ago, we didn't fully appreciate that it's going to become an individual relationship. We kinda had it, but not really. And so now that everything is done digitally, we used to think of it as a relationship with the advisor, and you send the individual employee their statement once or every quarter. We're talking to those people digitally all the time because it's becoming... Now we have 18 million people that we're talking to, and we're, by the way, number three group player in Canada. We're number one group player in Ireland. We're the largest group employer insurance company in Canada. Like, we have big group businesses.
What can those digital turn into over the next five, 10 years? But I haven't even begun to explore that, so.
Fantastic. Well, Jeff, we're out of time.
Right.
I could chat with you for hours, but thank you very much for coming to the conference.
John, thanks to you, thanks to Barclays, and thanks, everyone, for your attention. Really enjoyed it. Thank you.