IGM Financial Inc.
Outlook

The Competitive Landscape

IGM Financial and its subsidiaries operate in a highly competitive environment. Investors Group and Investment Planning Counsel compete directly with other retail financial service providers, including other financial planning firms, as well as full service brokerages, banks and insurance companies. Investors Group, Mackenzie and Investment Planning Counsel compete directly with other mutual fund managers and other investment managers, and are also in competition with other asset classes for an increased share of clients' investable assets.

Canadian banks remain a dominant force in Canadian retail financial services. The banks distribute financial products and services through their traditional bank branches, as well as through their full service and discount brokerage subsidiaries. Recently, bank branches have increased their emphasis on both financial planning and mutual funds. In addition, each of the big six banks owns one or more mutual fund management subsidiaries which distribute through these and other distribution channels. Collectively, mutual fund assets of the big six bank-owned mutual fund managers represented 35% of total industry mutual fund assets at December 31, 2004 and accounted for approximately 69% of the industry's long term mutual fund net sales during 2004.

Mutual fund dealers and other financial planning firms represent a significant distribution channel for mutual funds, particularly those managed by third parties. The last five years have been characterized by significant consolidation in this sector of the industry, with many of the larger firms being purchased by mutual fund managers and insurers. Despite this level of consolidation activity, the sector remains fragmented. Management anticipates continuing consolidation in this segment of the industry as smaller participants are acquired by larger organizations.

As a result of this consolidation activity, the mutual fund management sector is characterized by large, often vertically-integrated, firms. The ten largest firms and their subsidiaries represented 79.6% of industry assets at December 31, 2004 with smaller firms representing primarily niche players. Management believes scale, access to distribution, and a broad product shelf are key competitive success factors in the financial services industry.