UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021



¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35355

_____________________________________________________________

MANNING & NAPIER, INC.

(Exact name of registrant as specified in its charter)



Delaware						45-2609100
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

290 Woodcliff Drive Fairport, New York						14450
(Address of principal executive offices)						(Zip Code)

(585) 325-6880

(Registrant’s telephone number, including area code)

_____________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value per share	MN	New York Stock Exchange
Common Stock Purchase Rights	MN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

~~Large accelerated filer~~

~~Accelerated filer~~

~~Non-accelerated filer~~

~~Smaller reporting company~~

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.



Class						Outstanding at ~~November 11, 2020~~May 10, 2021
Class A common stock, $0.01 par value per share						~~16,490,832~~16,991,569

TABLE OF CONTENTS



		Page
Part I	Financial Information
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Financial Condition as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	1
	Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	2
	Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	3
	Consolidated Statements of Shareholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	4
	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	65
	Notes to Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2622
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5039
Item 4.	Controls and Procedures	5140

Part II	Other Information
Item 1A.	Risk Factors	5241
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 5.	Other Information	6641
Item 6.	Exhibits	6741

	In this Quarterly Report on Form 10-Q, “we”, “our”, “us”, the “Company”, “Manning & Napier” and the “Registrant” refers to Manning & Napier, Inc. and, unless the context otherwise requires, its consolidated direct and indirect subsidiaries and predecessors.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Manning & Napier, Inc.

Consolidated Statements of Financial Condition

(U.S. dollars in thousands, except share data)


	September 30, 2020			December 31, 2019				March 31, 2021		December 31, 2020
	(unaudited)							(unaudited)
Assets							Assets
Cash and cash equivalents	$	52,175		$	67,088		Cash and cash equivalents	$	45,195	$	57,635
Accounts receivable	10,866			10,182			Accounts receivable	10,776		11,915
Investment securities	23,439			90,467			Investment securities	23,905		23,497
Prepaid expenses and other assets	13,765			5,607			Prepaid expenses and other assets	17,731		15,711
Total current assets	100,245			173,344			Total current assets	97,607		108,758
Property and equipment, net	3,334			4,565			Property and equipment, net	2,728		3,075
Operating lease right-of-use assets	16,981			18,795			Operating lease right-of-use assets	15,859		16,405
Net deferred tax assets, non-current	20,722			20,668			Net deferred tax assets, non-current	18,889		19,645
Goodwill	4,829			4,829			Goodwill	4,829		4,829
Other long-term assets	3,425			4,010			Other long-term assets	3,294		3,373
Total assets	$	149,536		$	226,211		Total assets	$	143,206	$	156,085

Liabilities							Liabilities
Accounts payable	$	2,726		$	1,614		Accounts payable	$	2,271	$	1,787
Accrued expenses and other liabilities	29,523			26,201			Accrued expenses and other liabilities	22,156		36,439
Deferred revenue	11,459			10,759			Deferred revenue	12,116		11,476
Total current liabilities	43,708			38,574			Total current liabilities	36,543		49,702
Operating lease liabilities, non-current	17,406			18,753			Operating lease liabilities, non-current	15,935		16,646
Amounts payable under tax receivable agreement, non-current	15,473			17,246			Amounts payable under tax receivable agreement, non-current	13,759		13,759
Other long-term liabilities	1,151			2,017			Other long-term liabilities	199		221
Total liabilities	77,738			76,590			Total liabilities	66,436		80,328
Commitments and contingencies (Note 9)							Commitments and contingencies (Note 9)	0		0
Shareholders’ equity							Shareholders’ equity
Class A common stock, $0.01 par value; 300,000,000 shares authorized; and 16,490,832 and 15,956,526 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	165			160
Class A common stock, $0.01 par value; 300,000,000 shares authorized; 17,423,202 and 17,010,797 shares issued and outstanding at March 31, 2021, 16,989,943 shares issued and outstanding at December 31, 2020							Class A common stock, $0.01 par value; 300,000,000 shares authorized; 17,423,202 and 17,010,797 shares issued and outstanding at March 31, 2021, 16,989,943 shares issued and outstanding at December 31, 2020	174		170
Treasury stock, at cost, 412,405 and zero shares at March 31, 2021 and December 31, 2020, respectively							Treasury stock, at cost, 412,405 and zero shares at March 31, 2021 and December 31, 2020, respectively	(2,987)		0
Additional paid-in capital	112,841			198,516			Additional paid-in capital	110,182		111,848
Retained deficit	(33,900		)	(38,478		)	Retained deficit	(23,586)		(28,826)
Accumulated other comprehensive loss	(185		)	(50		)	Accumulated other comprehensive loss	(228)		(235)
Total shareholders’ equity	78,921			160,148			Total shareholders’ equity	83,555		82,957
Noncontrolling interests	(7,123		)	(10,527		)	Noncontrolling interests	(6,785)		(7,200)
Total shareholders’ equity and noncontrolling interests	71,798			149,621			Total shareholders’ equity and noncontrolling interests	76,770		75,757
Total liabilities, shareholders’ equity and noncontrolling interests	$	149,536		$	226,211		Total liabilities, shareholders’ equity and noncontrolling interests	$	143,206	$	156,085

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Manning & Napier, Inc.

Consolidated Statements of Operations

(U.S. dollars in thousands, except share data)

(Unaudited)


	Three months ended September 30,					Nine months ended September 30,							Three months ended March 31,
	2020		2019			2020			2019					2021		2020
Revenues												Revenues
Management Fees												Management Fees
Wealth Management	$	13,743	$	14,181		$	41,335		$	42,913		Wealth Management		$	15,348	$	14,020
Institutional and Intermediary	13,534		14,815			38,255			44,927			Institutional and Intermediary		14,328		12,411
Distribution and shareholder servicing	2,424		2,570			7,117			7,760			Distribution and shareholder servicing		2,153		2,390
Custodial services	1,577		1,763			4,639			5,258			Custodial services		1,645		1,599
Other revenue	789		849			2,176			2,411			Other revenue		677		689
Total revenue	32,067		34,178			93,522			103,269			Total revenue		34,151		31,109
Expenses												Expenses
Compensation and related costs	18,605		19,504			55,247			61,113			Compensation and related costs		18,874		19,263
Distribution, servicing and custody expenses	2,596		2,959			7,834			9,736			Distribution, servicing and custody expenses		2,358		2,813
Other operating costs	6,611		8,286			21,197			25,232			Other operating costs		6,710		7,097
Total operating expenses	27,812		30,749			84,278			96,081			Total operating expenses		27,942		29,173
Operating income	4,255		3,429			9,244			7,188			Operating income		6,209		1,936
Non-operating income (loss)												Non-operating income (loss)
Interest expense	—		(13		)	(5		)	(26		)	Interest expense		(2)		(2)
Interest and dividend income	115		782			835			2,428			Interest and dividend income		123		357
Change in liability under tax receivable agreement	24		(394		)	(1,912		)	(199		)	Change in liability under tax receivable agreement		0		(2,850)
Net gains (losses) on investments	411		40			(5		)	1,162			Net gains (losses) on investments		337		(1,832)
Gain on sale of business	—		2,883			—			2,883

Total non-operating income (loss)	550		3,298			(1,087		)	6,248			Total non-operating income (loss)		458		(4,327)
Income before provision for (benefit from) income taxes	4,805		6,727			8,157			13,436			Income before provision for (benefit from) income taxes		6,667		(2,391)
Provision for (benefit from) income taxes	1,738		150			(28		)	723			Provision for (benefit from) income taxes		703		(3,226)
Net income attributable to controlling and noncontrolling interests	3,067		6,577			8,185			12,713			Net income attributable to controlling and noncontrolling interests		5,964		835
Less: net income attributable to noncontrolling interests	560		5,753			3,274			10,914
Less: net income (loss) attributable to noncontrolling interests												Less: net income (loss) attributable to noncontrolling interests		724		(23)
Net income attributable to Manning & Napier, Inc.	$	2,507	$	824		$	4,911		$	1,799		Net income attributable to Manning & Napier, Inc.		$	5,240	$	858

Net income per share available to Class A common stock												Net income per share available to Class A common stock
Basic	$	0.15	$	0.05		$	0.30		$	0.12		Basic		$	0.31	$	0.05
Diluted	$	0.13	$	0.05		$	0.15		$	0.12		Diluted		$	0.26	$	0.01
Weighted average shares of Class A common stock outstanding												Weighted average shares of Class A common stock outstanding
Basic	16,176,280		15,290,595			16,041,128			15,163,205			Basic		17,026,500		15,812,951
Diluted	18,928,954		15,600,686			48,339,759			15,466,339			Diluted		20,273,343		77,907,557

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Manning & Napier, Inc.

Consolidated Statements of Comprehensive Income

(U.S. dollars in thousands)

(Unaudited)


	Three months ended March 31,
		2021		2020
Net income attributable to controlling and noncontrolling interests		$	5,964	$	835
Net unrealized holding gains (losses) on investment securities, net of tax		8		(428)
Reclassification adjustment for net realized gains on investment securities included in net income		97		(33)
Comprehensive income		$	6,069	$	374
Less: Comprehensive income attributable to noncontrolling interests		822		(400)
Comprehensive income attributable to Manning & Napier, Inc.		$	5,247	$	774

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
Net income attributable to controlling and noncontrolling interests $ 3,067
$ 6,577
$ 8,185
$ 12,713
Net unrealized holding gains (losses) on investment securities, net of tax 6
(9 ) (243 ) 223
Reclassification adjustment for net realized gains on investment securities included in net income —
(15 ) (174 ) (21 )
Comprehensive income $ 3,073
$ 6,553
$ 7,768
$ 12,915
Less: Comprehensive income attributable to noncontrolling interests 639
5,730
2,992
11,074
Comprehensive income attributable to Manning & Napier, Inc. $ 2,434
$ 823
$ 4,776
$ 1,841

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Manning & Napier, Inc.

Consolidated Statements of Shareholders’ Equity

(U.S. dollars in thousands, except share data)

(Unaudited)



	Common Stock – Class A			Treasury Stock			Additional Paid in Capital		Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Non Controlling Interests
	Shares	Amount		Shares	Amount										Total














Three months ended March 31, 2021
Balance—December 31, 2020	16,989,943	$	170	0	$	0	$	111,848	$	(28,826)	$	(235)	$	(7,200)	$	75,757
Net income	—	—		—	—		—		5,240		—		724		5,964
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(295)		(295)
Net changes in unrealized investment securities gains or losses	—	—		—	—		—		—		7		1		8
Common stock issued under equity compensation plan, net of forfeitures	433,259	4		—	—		(4)		—		—		—		0
Shares withheld to satisfy tax withholding requirements related to equity awards	—	—		—	—		(2,582)		—		—		(322)		(2,904)
Equity-based compensation	—	—		—	—		1,091		—		—		136		1,227

Purchases of treasury stock	(412,405)	—		412,405	(2,987)		—		—		—		—		(2,987)
Impact of changes in ownership of Manning & Napier Group, LLC (Note 4)	—	—		—	—		(171)		—		—		171		0

Balance—March 31, 2021	17,010,797	$	174	412,405	$	(2,987)	$	110,182	$	(23,586)	$	(228)	$	(6,785)	$	76,770

Common Stock – Class A
Additional
Paid in Capital

Retained
Deficit

Accumulated
Other
Comprehensive Income (Loss)

Non
Controlling
Interests

Shares Amount Total
Three months ended September 30, 2020
Balance—June 30, 2020 16,275,359
$ 163
$ 112,300
$ (36,407 ) $ (112 ) $ (6,852 ) $ 69,092
Net income —
—
—
2,507
—
560
3,067
Distributions to noncontrolling interests —
—
—
—
—
(177 ) (177 )
Net changes in unrealized investment securities gains or losses —
—
—
—
(73 ) 79
6
Common stock issued under equity compensation plan, net of forfeitures 215,473
2
(2 ) —
—
—
—
Shares withheld to satisfy tax withholding requirements related to equity awards vested —
—
(565 ) —
—
(455 ) (1,020 )
Equity-based compensation —
—
1,108
—
—
(278 ) 830
Balance—September 30, 2020 16,490,832
$ 165
$ 112,841
$ (33,900 ) $ (185 ) $ (7,123 ) $ 71,798

Nine months ended September 30, 2020
Balance—December 31, 2019 15,956,526
$ 160
$ 198,516
$ (38,478 ) $ (50 ) $ (10,527 ) $ 149,621
Net income —
—
—
4,911
—
3,274
8,185
Distributions to noncontrolling interests —
—
—
—
—
(177 ) (177 )
Net changes in unrealized investment securities gains or losses —
—
—
—
(135 ) (108 ) (243 )
Common stock issued under equity compensation plan, net of forfeitures 534,306
5
(5 ) —
—
—
—
Shares withheld to satisfy tax withholding requirements related to equity awards vested —
—
(565 ) —
—
(457 ) (1,022 )
Equity-based compensation —
—
1,630
—
—
1,315
2,945
Dividends declared on Class A common stock - $0.02 per share —
—
—
(333 ) —
—
(333 )
Impact of changes in ownership of Manning & Napier Group, LLC (Note 4) —
—
(90,341 ) —
—
(443 ) (90,784 )
Deferred tax impacts from transactions with shareholders (Note 12) —
—
3,606

3,606
Balance—September 30, 2020 16,490,832
$ 165
$ 112,841
$ (33,900 ) $ (185 ) $ (7,123 ) $ 71,798

Common Stock – Class A
Additional
Paid in Capital

Retained
Deficit

Accumulated
Other
Comprehensive Income (Loss)

Non
Controlling
Interests

Shares Amount Total
Three months ended September 30, 2019
Balance—June 30, 2019 15,620,595
$ 156
$ 198,304
$ (38,372 ) $ (34 ) $ (11,324 ) $ 148,730
Net income —
—
—
824
—
5,753
6,577
Distributions to noncontrolling interests —
—
—
—
—
(2,624 ) (2,624 )
Net changes in unrealized investment securities gains or losses —
—
—
—
(1 ) (8 ) (9 )
Common stock issued under equity compensation plan, net of forfeitures (10,000 ) —
—
—
—
—
—
Equity-based compensation —
—
125
—
—
531
656
Dividends declared on Class A common stock - $0.02 per share —
—
—
(294 ) —
—
(294 )
Balance—September 30, 2019 15,610,595
$ 156
$ 198,429
$ (37,842 ) $ (35 ) $ (7,672 ) $ 153,036

Nine months ended September 30, 2019
Balance—December 31, 2018 15,310,958
$ 153
$ 198,604
$ (38,865 ) $ (77 ) $ (13,572 ) $ 146,243
Net income —
—
—
1,799
—
10,914
12,713
Distributions to noncontrolling interests —
—
—
—
—
(5,043 ) (5,043 )
Net changes in unrealized investment securities gains or losses —
—
—
—
42
181
223
Common stock issued under equity compensation plan, net of forfeitures 299,637
3
(3 ) —
—
—
—
Shares withheld to satisfy tax withholding requirements related to equity awards vested —
—
(15 ) —
—
(63 ) (78 )
Equity-based compensation —
—
527
—
—
2,279
2,806
Dividends declared on Class A common stock - $0.06 per share —
—
—
(852 ) —
—
(852 )
Cumulative effect of change in accounting principle, net of taxes —
—
—
76
—
—
76
Impact of changes in ownership of Manning & Napier Group, LLC —
—
(684 ) —
—
(2,368 ) (3,052 )
Balance—September 30, 2019 15,610,595
$ 156
$ 198,429
$ (37,842 ) $ (35 ) $ (7,672 ) $ 153,036


	Common Stock – Class A			Treasury Stock				Additional Paid in Capital		Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Non Controlling Interests
	Shares	Amount		Shares		Amount										Total













Three months ended March 31, 2020
Balance—December 31, 2019	15,956,526	$	160	$	0	$	0	$	198,516	$	(38,478)	$	(50)	$	(10,527)	$	149,621
Net income	—	—		—		—		—		858		—		(23)		835

Net changes in unrealized investment securities gains or losses	—	—		—		—		—		—		(84)		(344)		(428)
Common stock issued under equity compensation plan, net of forfeitures	318,833	3		—		—		(3)		—		—		—		0
Shares withheld to satisfy tax withholding requirements related to equity awards	—	—		—		—		0		—		—		(2)		(2)
Equity-based compensation	—	—		—		—		252		—		—		1,034		1,286
Dividends declared on Class A common stock - $0.02 per share	—	—		—		—		—		(333)		—		—		(333)
Impact of changes in ownership of Manning & Napier Group, LLC	—	—		—		—		(43)		—		—		43		0
Balance—March 31, 2020	16,275,359	$	163	$	0	$	0	$	198,722	$	(37,953)	$	(134)	$	(9,819)	$	150,979

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Manning & Napier, Inc.

Consolidated Statements of Cash Flows

(U.S. dollars in thousands)

(Unaudited)


	Nine months ended September 30,							Three months ended March 31,
	2020			2019				2021		2020
Cash flows from operating activities:							Cash flows from operating activities:
Net income attributable to controlling and noncontrolling interests	$	8,185		$	12,713		Net income attributable to controlling and noncontrolling interests	$	5,964	$	835
Adjustment to reconcile net income to net cash provided by operating activities:							Adjustment to reconcile net income to net cash provided by operating activities:
Equity-based compensation	2,945			2,806			Equity-based compensation	1,227		1,286
Depreciation and amortization	1,147			1,202			Depreciation and amortization	436		378
Change in amounts payable under tax receivable agreement	1,912			199			Change in amounts payable under tax receivable agreement	0		2,850
Impairment of long-lived assets	663			—

Gain on sale of intangible assets	(21		)	(160		)	Gain on sale of intangible assets	0		(19)
Gain on sale of business	—			(2,883		)

Net losses (gains) on investment securities	5			(1,162		)	Net losses (gains) on investment securities	(337)		1,832
Deferred income taxes	(789		)	504			Deferred income taxes	756		(3,734)
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:							(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Accounts receivable	(683		)	668			Accounts receivable	1,139		676
Prepaid expenses and other assets	(3,429		)	282			Prepaid expenses and other assets	(2,089)		(2,528)
Other long-term assets	2,450			1,898			Other long-term assets	627		767
Accounts payable	1,112			(232		)	Accounts payable	484		(309)
Accrued expenses and other liabilities	(165		)	(6,826		)	Accrued expenses and other liabilities	(13,868)		(9,761)
Deferred revenue	699			1,870			Deferred revenue	640		285
Other long-term liabilities	(2,832		)	(2,162		)	Other long-term liabilities	(706)		(1,534)
Net cash provided by operating activities	11,199			8,717
Net cash used in operating activities							Net cash used in operating activities	(5,727)		(8,976)
Cash flows from investing activities:							Cash flows from investing activities:
Purchase of property and equipment	(204		)	(1,689		)	Purchase of property and equipment	(2)		76
Sale of investments	71,310			9,937			Sale of investments	4,001		17,518
Purchase of investments	(23,250		)	(84,544		)	Purchase of investments	(4,063)		(10,520)
Sale of intangible assets	21			160			Sale of intangible assets	0		19
Proceeds from sale of business, net	—			2,902

Proceeds from maturity of investments	18,720			102,523			Proceeds from maturity of investments	0		10,165
Net cash provided by investing activities	66,597			29,289

Net cash (used in) provided by investing activities							Net cash (used in) provided by investing activities	(64)		17,258
Cash flows from financing activities:							Cash flows from financing activities:
Distributions to noncontrolling interests	(177		)	(5,043		)	Distributions to noncontrolling interests	(295)		0
Dividends paid on Class A common stock	(645		)	(932		)	Dividends paid on Class A common stock	0		(319)
Payment of shares withheld to satisfy withholding requirements	(1,022		)	(78		)	Payment of shares withheld to satisfy withholding requirements	(3,349)		(2)
Purchases of treasury stock							Purchases of treasury stock	(2,987)		0
Payment of capital lease obligations	(81		)	(104		)	Payment of capital lease obligations	(18)		(30)
Purchase of Class A units of Manning & Napier Group, LLC	(90,784		)	(3,052		)

Net cash used in financing activities	(92,709		)	(9,209		)	Net cash used in financing activities	(6,649)		(351)

Net (decrease) increase in cash and cash equivalents	(14,913		)	28,797			Net (decrease) increase in cash and cash equivalents	(12,440)		7,931
Cash and cash equivalents:							Cash and cash equivalents:
Beginning of period	67,088			59,586			Beginning of period	57,635		67,088
End of period	$	52,175		$	88,383		End of period	$	45,195	$	75,019

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Manning & Napier, Inc.

Notes to Consolidated Financial Statements

Note 1—Organization and Nature of the Business

Manning & Napier, Inc. ("Manning & Napier" or the "Company") provides a broad range of investment solutions through separately managed accounts, mutual funds, and collective investment trust funds, as well as a variety of consultative services that complement its investment process. Founded in 1970, the Company offers equity, fixed income and alternative strategies, as well as a range of blended asset portfolios, including life cycle funds. Headquartered in Fairport, New York, the Company serves a diversified client base of high-net-worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans, endowments and foundations.

The Company was incorporated in 2011 as a Delaware corporation, and is the sole managing member of Manning & Napier Group, LLC and its subsidiaries (“Manning & Napier Group”), a holding company for the investment management businesses conducted by its operating subsidiaries. The diagram below depicts the Company's organizational structure as of September 30, 2020. Manning & Napier Group completed the redemption of 60,012,419 of its Class A units held by M&N Group Holdings, LLC ("M&N Group Holdings") and Manning & Napier Capital Company, LLC ("MNCC") on May 11, 2020 with payment made from its cash, cash equivalents and proceeds from the sale of investment securities. Subsequent to the redemption, the Class A units were retired and as a result, the Company's ownershipMarch 31, 2021.

(1)The consolidated operating subsidiaries of Manning & Napier Group ~~increased from 19.5% to 88.2%~~include Manning & Napier Advisors, LLC ("MNA"), Manning & Napier Investor Services, Inc., Exeter Trust Company and Rainier Investment Management, LLC ("Rainier"). ~~Refer to Note 4 for further discussion.~~


~~(1)~~	The consolidated operating subsidiaries of Manning & Napier Group include Manning & Napier Advisors, LLC ("MNA"), Manning & Napier Investor Services, Inc., Exeter Trust Company and Rainier Investment Management, LLC ("Rainier").

Note 2—Summary of Significant Accounting Policies

Critical Accounting Policies

The Company's critical accounting policies and estimates are disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. The Company believes that the disclosures herein are adequate so that the information presented is not misleading; however, these financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019~~.2020. The financial data for the interim periods may not necessarily be indicative of results for future interim periods or for the full year.

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and related rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting and include all adjustments, consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim period.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ from these estimates or assumptions.

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~Summary of Presentation Changes~~

As of January 1, 2020, the Company revised its presentation of investment management revenue within its consolidated statements of operations. Investment management revenue, previously presented by investment vehicle, has been disaggregated to present investment management revenue by sales channel. Concurrently, the Company revised the presentation of assets under management ("AUM") activity previously reported by investment vehicle to present this activity by sales channel.

Amounts for the comparative prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported net income and do not represent a restatement of any previously published financial results.

~~Revision of Previously Reported Consolidated Statements of Operations~~

In the quarter ended September 30, 2020, the Company revised its sales channel classification of certain 2020 and 2019 investment management revenues to properly present these revenues as either wealth management or institutional and intermediary investment management revenues, in accordance with the "Summary of Presentation Changes" discussed above. The Company assessed the materiality of this item on its quarterly reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020, and concluded that the reclassification was not material to any such periods. The reclassification has no impact on total revenue, operating income, or net income. The impact to the classification of total investment management revenues between sales channels and among investment portfolios is illustrated below:

Three Months Ended March 31, 2019 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
(in thousands)
Wealth Management Revenue, as previously reported $ 16,469
$ 16,209
$ 32,678
Adjustments (1,996 ) (1,950 ) (3,946 )
Wealth Management Revenue, as revised $ 14,473
$ 14,259
$ 28,732

Institutional and Intermediary Revenue, as previously reported $ 13,234
$ 12,932
$ 26,166
Adjustments 1,996
1,950
3,946
Institutional and Intermediary Revenue, as revised $ 15,230
$ 14,882
$ 30,112

Three Months Ended March 31, 2020 Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
(in thousands)
Wealth Management Revenue, as previously reported $ 14,300
$ 13,740
$ 28,040
Adjustments (280 ) (169 ) (449 )
Wealth Management Revenue, as revised $ 14,020
$ 13,571
$ 27,591

Institutional and Intermediary Revenue, as previously reported $ 12,131
$ 12,142
$ 24,273
Adjustments 280
169
449
Institutional and Intermediary Revenue, as revised $ 12,411
$ 12,311
$ 24,722

~~Three Months Ended March 31, 2020~~

~~Three Months Ended March 31, 2019~~

~~(in thousands)~~

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

Wealth Management Institutional and Intermediary Total Wealth Management Institutional and Intermediary Total
Blended Asset, as previously reported 11,942
8,186
20,128
13,498
7,828
21,326
Adjustments —
—
—
(1,084 ) 1,084
—
Blended Asset, as revised 11,942
8,186
20,128
12,414
8,912
21,326
Equity, as previously reported 2,165
3,619
5,784
2,761
4,957
7,718
Adjustments (280 ) 280
—
(916 ) 916
—
Equity, as revised 1,885
3,899
5,784
1,845
5,873
7,718
Fixed Income, as previously reported 193
326
519
210
449
659
Adjustments —
—
—
4
(4 ) —
Fixed Income, as revised 193
326
519
214
445
659
Total, as previously reported 14,300
12,131
26,431
16,469
13,234
29,703
Adjustments (280 ) 280
—
(1,996 ) 1,996
—
Total, as revised 14,020
12,411
26,431
14,473
15,230
29,703

Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
(in thousands)
Wealth Management Institutional and Intermediary Total Wealth Management Institutional and Intermediary Total
Blended Asset, as previously reported 12,148
7,486
19,634
13,186
7,607
20,793
Adjustments (164 ) 164
—
(932 ) 932
—
Blended Asset, as revised 11,984
7,650
19,634
12,254
8,539
20,793
Equity, as previously reported 1,470
4,345
5,815
2,819
4,894
7,713
Adjustments (5 ) 5
—
(1,026 ) 1,026
—
Equity, as revised 1,465
4,350
5,815
1,793
5,920
7,713
Fixed Income, as previously reported 122
311
433
204
431
635
Adjustments —
—
—
8
(8 ) —
Fixed Income, as revised 122
311
433
212
423
635
Total, as previously reported 13,740
12,142
25,882
16,209
12,932
29,141
Adjustments (169 ) 169
—
(1,950 ) 1,950
—
Total, as revised 13,571
12,311
25,882
14,259
14,882
29,141

Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
(in thousands)
Wealth Management Institutional and Intermediary Total Wealth Management Institutional and Intermediary Total
Blended Asset, as previously reported 24,090
15,672
39,762
26,684
15,435
42,119
Adjustments (164 ) 164
—
(2,016 ) 2,016
—
Blended Asset, as revised 23,926
15,836
39,762
24,668
17,451
42,119
Equity, as previously reported 3,635
7,964
11,599
5,580
9,851
15,431
Adjustments (285 ) 285
—
(1,942 ) 1,942
—
Equity, as revised 3,350
8,249
11,599
3,638
11,793
15,431
Fixed Income, as previously reported 315
637
952
414
880
1,294
Adjustments —
—
—
12
(12 ) —
Fixed Income, as revised 315
637
952
426
868
1,294
Total, as previously reported 28,040
24,273
52,313
32,678
26,166
58,844
Adjustments (449 ) 449
—
(3,946 ) 3,946
—
Total, as revised 27,591
24,722
52,313
28,732
30,112
58,844

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

Principles of Consolidation

The Company consolidates all majority-owned subsidiaries. ~~In addition, as~~As of ~~September 30, 2020,~~March 31, 2021, Manning & Napier holds an economic interest of approximately ~~88.2%~~88.9% in Manning & Napier Group and, as managing member, controls all of the business and affairs of Manning & Napier Group. As a result, the Company consolidates the financial results of Manning & Napier Group and records a noncontrolling interest on its consolidated statements of financial condition with respect to the remaining economic interest in Manning & Napier Group held by Manning & Napier Group Holdings, LLC ("M&N Group Holdings") and ~~MNCC.~~Manning & Napier Capital Company, LLC ("MNCC").

All material intercompany transactions have been eliminated in consolidation.

In accordance with Accounting Standards Update ("ASU") 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis, the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design, a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance, and whether a company is obligated to absorb losses or receive benefits that could potentially be significant to the entity. The standard also requires ongoing assessments of whether a company is the primary beneficiary of a variable interest entity (“VIE”). When utilizing the voting interest entity ("VOE") model, controlling financial interest is generally defined as majority ownership of voting interests.

The Company provides seed capital to its investment teams to develop new strategies and services for its clients. The original seed investment may be held in a separately managed account, comprised solely of the Company's investments or within a mutual fund, where the Company's investments may represent all or only a portion of the total equity investment in the mutual fund. Pursuant to U.S. GAAP, the Company evaluates its investments in mutual funds on a regular basis and consolidates such mutual funds for which it holds a controlling financial interest. When no longer deemed to hold a controlling financial interest, the Company would deconsolidate the fund and classify the remaining investment as either an equity method investment, equity investments, at fair value, or as trading securities, as applicable. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company did not have investments classified as an equity method investment.

The Company serves as the investment adviser for Manning & Napier Fund, Inc. series of mutual funds (the “Fund”), Exeter Trust Company Collective Investment Trusts (“CIT”) and Rainier Multiple Investment Trust. The Fund, CIT and Rainier Multiple Investment Trust are legal entities, the business and affairs of which are managed by their respective boards of directors. As a result, each of these entities is a VOE. The Company holds, in limited cases, direct investments in a mutual fund (which are made on the same terms as are available to other investors) and consolidates each of these entities where it has a controlling financial interest or a majority voting interest. The Company's investments in the Fund amounted to approximately ~~$1.7~~$1.1 million as of ~~September 30, 2020~~March 31, 2021 and ~~$3.2~~$1.0 million as of December 31, ~~2019.~~2020. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company did not have a controlling financial interest in any mutual fund.

Revenue

Investment Management: Investment management fees are computed as a percentage of AUM. The Company's performance obligation is a series of services that form part of a single performance obligation satisfied over time.

Separately managed accounts are paid in advance, typically for a semi-annual or quarterly period, or in arrears, typically for a monthly or quarterly period. When investment management fees are paid in advance, the Company defers the revenue as a contract liability and recognizes it over the applicable period. When investment management fees are paid in arrears, the Company estimates revenue and records a contract asset (accrued accounts receivable) based on AUM as of the most recent month end date.

Mutual funds and collective investment trust investment management revenue is calculated and earned daily based on AUM. Revenue is presented net of cash rebates and fees waived pursuant to contractual expense limitations of the funds. The Company also has agreements with third parties who provide recordkeeping and administrative services for employee benefit plans participating in the collective investment trusts. The Company is acting as an agent on behalf of the employee benefit plan sponsors, therefore, investment management revenue is recorded net of fees paid to third party service providers.

Distribution and shareholder servicing: The Company receives distribution and servicing fees for providing services to its affiliated mutual funds. Revenue is computed and earned daily based on a percentage of AUM. The performance obligation is a series of services that form part of a single performance obligation satisfied over time. The Company has agreements with third parties who provide distribution and administrative services for its mutual funds. The agreements are evaluated to determine whether revenue should be reported gross or net of payments to third-party service providers. The Company controls the services provided and acts as a principal in the relationship. Therefore, distribution and shareholder servicing revenue is recorded gross of fees paid to third parties.

Custodial services: Custodial service fees are calculated as a percentage of the client’s market value with additional fees charged for certain transactions. For the safeguarding and administrative services that are subject to a percentage of market

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

value fee, the Company's performance obligation is a series of services that form part of a single performance obligation

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

satisfied over time. Revenue for transactions assigned a stand-alone selling price is recognized in the period in which the transaction is executed. Custodial service fees are billed monthly in arrears. The Company has agreements with third parties who provide safeguarding, recordkeeping and administrative services for their clients. The Company controls the services provided and acts as a principal in the relationship. Therefore, custodial service revenue is recorded gross of fees paid to third parties.

Cash and Cash Equivalents

The Company generally considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are primarily held in operating accounts at major financial institutions and also in money market securities. Cash equivalents are stated at cost, which approximates market value due to the short-term maturity of these investments. The fair value of cash equivalents has been classified as Level 1 in accordance with the fair value hierarchy.

Investment Securities

Investment securities are classified as either equity investments, trading, equity method investments or available-for-sale and are carried at fair value. Fair value is determined based on quoted market prices in active markets for identical or similar instruments.

Investment securities classified as equity investments, at fair value consist of equity securities and investments in mutual funds for which the Company provides advisory services. Realized and unrealized gains and losses on equity investments, at fair value or trading securities, as applicable, are recorded in net gains (losses) on investments in the consolidated statements of operations. At ~~September 30, 2020~~, equity investments, at fair value consist of investments held by the Company to provide initial cash seeding for product development purposes and investments to hedge economic exposure to market movements on its deferred compensation plan.

Investment securities classified as available-for-sale consist of U.S. Treasury notes and corporate ~~bonds and other short-term investments.~~bonds. Unrealized gains and losses on available-for-sale securities are excluded from earnings and are reported, net of deferred income tax, as a separate component of accumulated other comprehensive income in shareholders’ equity until realized. The Company periodically reviews each individual security position that has an unrealized loss, or impairment, to determine if that impairment is other-than-temporary. If impairment is determined to be other-than-temporary, the carrying value of the security will be written down to fair value and the loss will be recognized in earnings. Realized gains and losses on sales of available-for-sale securities are computed on a specific identification basis and are recorded in net gains (losses) on investments in the consolidated statements of operations.

Property, Equipment, Software and ~~Equipment~~Depreciation

Property and equipment is presented net of accumulated depreciation of approximately $12.3 million and ~~$11.4~~$12.6 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Capitalized implementation costs for hosting arrangements are included within prepaid expenses and other assets on the Company's statements of financial condition and totaled approximately $6.0 million and $5.3 million, net of accumulated amortization, as of March 31, 2021 and December 31, 2020, respectively.

Goodwill and Intangible Assets

Goodwill represents the excess cost over the fair value of the identifiable net assets of acquired companies. Identifiable intangible assets generally represent the cost of client relationships and investment management agreements acquired as well as trademarks. Goodwill and indefinite-lived assets are tested for impairment annually or more frequently if events or circumstances indicate that the carrying value may not be recoverable. Intangible assets subject to amortization are tested for impairment whenever events or circumstances indicate that the carrying value may not be recoverable. Goodwill and intangible assets require significant management estimate and judgment, including the valuation and expected life determination in connection with the initial purchase price allocation and the ongoing evaluation for impairment.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses and other liabilities and operating lease liabilities, non-current on its consolidated statements of financial condition. Finance leases are included in other long-term assets, accrued expenses and other liabilities, and other long-term liabilities on its consolidated statements of financial condition.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate, for each identified lease, is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term. The

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

operating lease ROU asset is reduced for any lease incentives. The Company's lease terms may include options to extend or

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are combined for all classes of underlying assets.

~~Impairment~~Treasury Stock

On February 3, 2021, the Board of ~~Long-Lived Assets~~Directors approved a share repurchase program authorizing the Company to purchase up to $10.0 million of Manning & Napier Inc. Class A common shares. As of March 31, 2021, the Company had purchased 412,405 shares of Class A common stock for an aggregate price of approximately $3.0 million.

~~The Company reviews~~Treasury stock is accounted for under the ~~carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical~~ cost ~~carrying value of an asset may no longer be appropriate. During the nine months ended September 30, 2020,~~method and is included as a ~~downturn~~deduction from equity in the ~~commercial real estate market indicated that an asset group, including previously vacated office space, may not be recoverable. The Company assessed recoverability~~Shareholders' Equity section of the ~~asset group~~consolidated statements of financial condition. Upon any subsequent retirement or resale, the treasury stock account is reduced by ~~comparing~~ the ~~undiscounted future net cash flows expected to result from the asset group to its carrying value. The carrying value exceeded the undiscounted future net cash flows~~cost of the asset, and an impairment loss of approximately $0.7 million was recognized during the nine months ended September 30, 2020 as the difference between the net book value and the fair value of the asset group.such stock.

Operating Segments

The Company operates in ~~one~~1 segment, the investment management industry.

Recent Accounting Pronouncements

In ~~August 2018,~~December 2019, the Financial Accounting Standards Board ("FASB") issued ASU ~~2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's~~2019-12, Simplifying the Accounting for ~~Implementation Costs Incurred in a Cloud Computing Arrangement That~~Income Taxes, which is ~~a Service Contract. The amendment aligns~~intended to simplify various aspects of the ~~requirements~~income tax accounting guidance, including interim-period accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements that currently exist in U.S. GAAP for capitalizing implementation costs incurred to develop or obtain internal-use software. Under the new standard, implementation costs are deferred and presentedenacted changes in the same financial statement caption on the consolidated statements of financial condition as a prepayment of related arrangement fees. The deferred costs are recognized over the term of the arrangement in the same financial statement caption in the consolidated statements of operations as the related fees of the arrangement. The Company adopted the provisions of this guidance using the prospectivetax law. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption ~~approach, which does not require the restatement of prior years.~~is permitted. The adoption of this ASU ~~did not have a material impact on the Company's statement~~as of operations as requirements under the standard are generally consistent with its previous accounting for cloud computing arrangements, with the primary difference being the classification of certain information in its statements of financial condition and related disclosures.

As of September 30, 2020, the Company had a total of approximately $4.1 million of capitalized implementation costs for hosting arrangements within prepaid expenses and other assets on its statements of financial condition, with no amounts in accumulated amortization and no amortization expense recognized during the nine months ended September 30, 2020. At December 31, 2019, approximately $0.4 million of these costs were capitalized within property and equipment, net. The hosting arrangements that are service contracts include internal and external costs related to various technology additions in support of the Company's business. Amortization costs are recorded on a straight-line basis over the term of the hosting arrangement agreement.

In January ~~2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment~~, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. The ASU requires goodwill impairments to be measured on the basis of the fair value of the reporting unit relative to the reporting unit's carrying amount rather than on the basis of the implied amount of goodwill relative to the goodwill balance of the reporting unit. The adoption of this ASU1, 2021 did not have a material impact on the Company's consolidated financial statements.

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

Note 3—Revenue

Disaggregated Revenue

The following table represents the Company’s wealth management and institutional and intermediary investment management revenue by investment portfolio during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:










	Three months ended March 31, 2021						Three months ended March 31, 2020
	Wealth Management		Institutional and Intermediary		Total		Wealth Management		Institutional and Intermediary		Total
	(in thousands)
Blended Asset	$	13,634	$	8,068	$	21,702	$	11,942	$	8,186	$	20,128
Equity	1,608		5,865		7,473		1,885		3,899		5,784
Fixed Income	106		395		501		193		326		519
Total	$	15,348	$	14,328	$	29,676	$	14,020	$	12,411	$	26,431

Three months ended September 30, 2020 Three months ended September 30, 2019
Wealth Management Institutional and Intermediary Total Wealth Management Institutional and Intermediary Total
(in thousands)
Blended Asset $ 12,117
$ 8,261
$ 20,378
$ 12,397
$ 8,466
$ 20,863
Equity 1,450
4,892
6,342
1,580
5,967
7,547
Fixed Income 176
381
557
204
382
586
Total $ 13,743
$ 13,534
$ 27,277
$ 14,181
$ 14,815
$ 28,996

Nine months ended September 30, 2020 Nine months ended September 30, 2019
Wealth Management Institutional and Intermediary Total Wealth Management Institutional and Intermediary Total
(in thousands)
Blended Asset $ 36,044
$ 24,096

$ 60,140
$ 37,065
$ 25,917
$ 62,982
Equity 4,800
13,141

17,941
5,218
17,760
22,978
Fixed Income 491
1,018

1,509
630
1,250
1,880
Total $ 41,335
$ 38,255

$ 79,590
$ 42,913
$ 44,927
$ 87,840

Accounts Receivable

Accounts receivable as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consisted of the following:


	September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
	(in thousands)					(in thousands)
Accounts receivable - third parties	$	6,656	$	5,778	Accounts receivable - third parties	$	6,174	$	7,315
Accounts receivable - affiliated mutual funds and collective investment trusts	4,210		4,404		Accounts receivable - affiliated mutual funds and collective investment trusts	4,602		4,600
Total accounts receivable	$	10,866	$	10,182	Total accounts receivable	$	10,776	$	11,915

Accounts receivable represents the Company's unconditional rights to consideration arising from its performance under separately managed account, mutual fund and collective investment trust, distribution and shareholder servicing, and custodial service contracts. Accounts receivable balances do not include an allowance for doubtful accounts nor has any significant bad debt expense attributable to accounts receivable been recorded during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 or ~~2019.~~2020.

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

Advisory and Distribution Agreements

The Company earns investment advisory fees, distribution fees and administrative service fees under agreements with affiliated mutual funds and collective investment trusts. Fees earned for advisory and distribution services provided were approximately ~~$9.3 million and $26.7~~$9.9 million for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, respectively, and approximately ~~$9.8 million and $31.1~~$8.9 million for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, respectively, which represents greater than 25% of revenue in each period. The following provides amounts due from affiliated mutual funds and collective investment trusts reported within accounts receivable in the consolidated statements of financial condition as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


	March 31, 2021		December 31, 2020
	(in thousands)
Affiliated mutual funds	$	3,270	$	3,275
Affiliated collective investment trusts	1,332		1,325
Accounts receivable - affiliated mutual funds and collective investment trusts	$	4,602	$	4,600

September 30, 2020 December 31, 2019
(in thousands)
Affiliated mutual funds $ 2,961
$ 3,164
Affiliated collective investment trusts 1,249
1,240
Accounts receivable - affiliated mutual funds and collective investment trusts $ 4,210
$ 4,404

Contract assets and liabilities

Accrued accounts receivable: Accrued accounts receivable represents the Company's contract asset for revenue that has been recognized in advance of billing separately managed account contracts. Consideration for the period billed in arrears is dependent on the client’s AUM on a future billing date and therefore conditional as of the reporting period end. During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, revenue was increased by less than $0.1 million for changes in transaction price. Accrued accounts receivable of approximately $0.3 million is reported within prepaid expenses and other assets in the consolidated statements of financial condition for both ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

Deferred revenue: Deferred revenue is recorded when consideration is received or unconditionally due in advance of providing services to the Company's customer. Revenue recognized during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 that was included in deferred revenue at the beginning of the period was approximately ~~$10.6~~$8.8 million.

Costs to obtain a contract: Under compensation plans in effect for periods prior to January 1, 2020, certain incremental first year commissions directly associated with new customer contracts were capitalized and amortized on a straight-line basis over an estimated customer contract period of 3 to 7 years. The total net asset as of ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019~~2020 was approximately ~~$0.8 million and $1.0 million, respectively.~~$0.7 million. The related amortization expense, which is included in compensation and related costs, totaled ~~approximately~~less than $0.1 ~~million and $0.2~~ million for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and $0.1 ~~million and $0.3~~ million for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. An impairment loss is recorded for contract acquisition costs related to client contracts that cancel during the period. ~~These~~There were 0 impairment losses ~~totaled~~for the three months ended March 31, 2021 and less than $0.1 million for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2020 and 2019.~~March 31, 2020.

Note 4—Noncontrolling Interests

Manning & Napier holds an economic interest of approximately ~~88.2%~~88.9% in Manning & Napier Group, and as managing member controls all of the business and affairs of Manning & Napier Group. As a result, the Company consolidates the financial results of Manning & Napier Group and records a noncontrolling interest on its consolidated statements of financial condition with respect to the remaining approximately ~~11.8%~~11.1% economic interest in Manning & Napier Group held by M&N Group Holdings and MNCC. Net income attributable to noncontrolling interests on the statements of operations represents the portion of earnings attributable to the economic interest in Manning & Napier Group held by the noncontrolling interests.

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

The following table provides a reconciliation from “Income before provision for (benefit from) income taxes” to “Net income attributable to Manning & Napier, Inc.”:


	Three months ended March 31,
		2021			2020
		(in thousands)
Income (loss) before provision for (benefit from) income taxes		$	6,667		$	(2,391)
Less: income (loss) before provision for (benefit from) income taxes of Manning & Napier, Inc. (1)		7			(2,866)
Income before provision for (benefit from) income taxes, as adjusted		6,660			475
Controlling interest percentage (2)		88.9		%	19.5		%
Net income attributable to controlling interest		5,921			93
Plus: income (loss) before provision for (benefit from) income taxes of Manning & Napier, Inc. (1)		7			(2,866)
Income (loss) before provision for (benefit from) income taxes attributable to Manning & Napier, Inc.		5,928			(2,773)
Less: provision for (benefit from) income taxes of Manning & Napier, Inc.(3)		688			(3,631)
Net income attributable to Manning & Napier, Inc.		$	5,240		$	858

________________________

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Income before provision for (benefit from) income taxes $ 4,805
$ 6,727
$ 8,157
$ 13,436
Less: income (loss) before provision for (benefit from) income taxes of Manning & Napier, Inc. ⁽¹⁾
14
(388 ) (1,950 ) (207 )
Income before provision for (benefit from) income taxes, as adjusted 4,791
7,115
10,107
13,643
Controlling interest percentage ⁽²⁾
88.2 % 18.9 % 64.0 % 18.8 %
Net income attributable to controlling interest 4,225
1,341
6,471
2,562
Plus: income (loss) before provision for (benefit from) income taxes of Manning & Napier, Inc. ⁽¹⁾
14
(388 ) (1,950 ) (207 )
Income before provision for (benefit from) income taxes attributable to Manning & Napier, Inc. 4,239
953
4,521
2,355
Less: provision for (benefit from) income taxes of Manning & Napier, Inc.⁽³⁾
1,732
129
(390 ) 556
Net income attributable to Manning & Napier, Inc. $ 2,507
$ 824
$ 4,911
$ 1,799
(1)Manning & Napier, Inc. incurs certain income or expenses that are only attributable to it and are therefore excluded from the net income attributable to noncontrolling interests.

~~________________________~~

(2)Income before provision for (benefit from) income taxes is allocated to the controlling interest based on the percentage of units of Manning & Napier Group held by Manning & Napier, Inc. The amount represents the Company's weighted ownership of Manning & Napier Group's income for the respective periods.


~~(1)~~	~~Manning & Napier, Inc. incurs certain income or expenses that are only attributable to it and are therefore excluded from the net income attributable to noncontrolling interests.~~


~~(2)~~	Income before provision for (benefit from) income taxes is allocated to the controlling interest based on the percentage of units of Manning & Napier Group held by Manning & Napier, Inc. The amount represents the Company's weighted ownership of Manning & Napier Group's income for the respective periods and anticipates a closing of the books pursuant to Internal Revenue Code Section 1377.

~~(3)~~

The consolidated provision for (benefit from) income taxes is equal to the sum of (i) the provision for (benefit from) income taxes for entities other than Manning & Napier, Inc. and (ii) the provision for (benefit from) income taxes of Manning & Napier, Inc. which includes all U.S. federal and state income taxes. The consolidated provision for (benefit from) income taxes was a provision of $1.7 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively, and a benefit of less than $0.1 million and provision of $0.7 million for the nine months ended September 30, 2020 and 2019, respectively.

(3)The consolidated provision for (benefit from) income taxes is equal to the sum of (i) the provision for (benefit from) income taxes for entities other than Manning & Napier, Inc. and (ii) the provision for (benefit from) income taxes of Manning & Napier, Inc. which includes all U.S. federal and state income taxes. The consolidated provision for (benefit from) income taxes was a provision of $0.7 million and a benefit of $3.2 million for the three months ended March 31, 2021 and 2020, respectively.

As of ~~September 30, 2020,~~March 31, 2021, a total of 2,021,781 units of Manning & Napier Group were held by the noncontrolling interests. Pursuant to the terms of the exchange agreement entered into at the time of the Company's initial public offering ("Exchange Agreement"), such units may be tendered for exchange or redemption. For any units exchanged, the Company may (i) pay an amount of cash equal to the number of tendered units multiplied by the value of one share of the Company's Class A common stock less a market discount and expected expenses, or, at the Company's election, (ii) issue shares of the Company's Class A common stock on a one-for-one basis, subject to customary adjustments. As the Company receives units of Manning & Napier Group that are exchanged, the Company's ownership of Manning & Napier Group will increase.

On March 15, ~~2020, a total~~2021, the Company received notice that 1,592,969 of ~~60,012,419~~ Class A units ~~including 59,957,419 units held by William~~of Manning ~~who was previously the Chairman of the Company's Board of Directors,~~& Napier Group were tendered for ~~either cash~~redemption or ~~shares of the Company's Class A common stock pursuant to the exchange process.~~exchange. The independent directors, on behalf of the Company, ~~as managing member~~decided that such exchange will be settled in 1,592,969 shares of Manning & Napier Group, decided to settle the transaction as a redemption, utilizing approximately $90.8 million in cash, including approximately $90.7 million paid to Mr. Manning. Manning & Napier Group completed the redemption on May 11, 2020 with payment made from its cash, cash equivalents and proceeds from the sale of investment securities. Subsequent to the redemption theunregistered Class A ~~units were retired and as a result,~~Common Stock of the ~~Company's ownership~~Company. The Company expects the settlement of ~~Manning & Napier Group increased from 19.5%~~the exchange to ~~88.2%.~~occur later in the year.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, Class A common stock was issued under the Company's 2011 Equity Compensation Plan (the "Equity Plan") for which Manning & Napier, Inc. acquired an equivalent number of Class A units of Manning & Napier Group.

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

The following is the impact to the Company's equity ownership interest in Manning & Napier Group for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:


	Manning & Napier Group Class A Units Held
	Manning & Napier	Noncontrolling Interests	Total	Manning & Napier Ownership %









As of December 31, 2020	15,783,638	2,021,781	17,805,419	88.6%
Class A Units issued	433,259	—	433,259	0.3%

As of March 31, 2021	16,216,897	2,021,781	18,238,678	88.9%

Manning & Napier Group Class A Units Held

Manning & Napier

Noncontrolling Interests Total Manning & Napier Ownership %
As of December 31, 2019 14,750,221
62,034,200
76,784,421
19.2%
Class A Units issued 318,833
—
318,833
0.3%
Class A Units redeemed —
(60,012,419 ) (60,012,419 ) 68.7%
As of September 30, 2020 15,069,054
2,021,781
17,090,835
88.2%

Manning & Napier Inc., as managing member, controls all of the business and affairs of Manning & Napier ~~Group prior to and subsequent to the redemption that was completed during the second quarter of 2020.~~Group. Since the Company continues to have a controlling interest in Manning & Napier Group, the aforementioned changes in ownership of Manning & Napier Group were accounted for as equity transactions under ASC Topic 810, Consolidation. Additional paid-in capital and noncontrolling interests in the consolidated statements of financial position are adjusted to reallocate the Company's historical equity to reflect the change in ownership of Manning & Napier Group.

At ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019,~~2020, the Company had recorded a liability of ~~$19.4~~$19.0 million, ~~and $17.5 million, respectively,~~ representing the estimated payments due to the selling unit holders under the tax receivable agreement ("TRA") entered into between Manning & Napier and the other holders of Class A Units of Manning & Napier Group. Of these amounts, approximately ~~$4.0 million and $0.3~~$5.2 million were included in accrued expenses and other liabilities at ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019, respectively.~~2020. The Company made no0 payments pursuant to the TRA during either of the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019. Refer to Note 12 for further discussion surrounding the amounts payable under the TRA.~~2020.

Obligations pursuant to the TRA are obligations of Manning & Napier. They do not impact the noncontrolling interests. These obligations are not income tax obligations. Furthermore, the TRA has no impact on the allocation of the provision for income taxes to the Company’s net income.

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

Note 5—Investment Securities

The following represents the Company’s investment securities holdings as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~:

September 30, 2020
Cost
Unrealized
Gains

Unrealized
Losses

Fair
Value
(in thousands)
Available-for-sale securities
U.S. Treasury notes $ 9,392
$ —
$ (46 ) $ 9,346
Fixed income securities 7,465
—
(88 ) 7,377
16,723
Equity investments, at fair value
Equity securities 4,992
Mutual funds 1,724
6,716
Total investment securities $ 23,439
2020:


	December 31, 2019										March 31, 2021
	Cost		Unrealized Gains		Unrealized Losses			Fair Value			Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(in thousands)										(in thousands)
Available-for-sale securities										Available-for-sale securities
U.S. Treasury notes	$	33,908	$	193	$	—		$	34,101	U.S. Treasury notes	$	11,089	$	0	$	(130)	$	10,959
Fixed income securities	35,148		—		(91		)	35,057		Fixed income securities	5,952		0		(45)		5,907
Short-term investments	12,119		—		—			12,119

								81,277									16,866
Equity investments, at fair value										Equity investments, at fair value
Equity securities								6,038		Equity securities							5,980
Mutual funds								3,152		Mutual funds							1,059
								9,190									7,039
Total investment securities								$	90,467	Total investment securities							$	23,905


	December 31, 2020
	Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(in thousands)
Available-for-sale securities
U.S. Treasury notes	$	10,587	$	0	$	(89)	$	10,498
Fixed income securities	6,497		0		(94)		6,403

							16,901
Equity investments, at fair value
Equity securities							5,592
Mutual funds							1,004
							6,596
Total investment securities							$	23,497

Investment securities are classified as either equity investments or available-for-sale and are carried at fair value. Fair value is determined based on quoted market prices in active markets for identical or similar instruments.

Investment securities classified as equity investments, at fair value consist of equity securities and investments in mutual funds for which the Company provides advisory services. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~,2020, equity investments, at fair value consist of investments held by the Company to provide initial cash seeding for product development purposes and investments in mutual funds to hedge economic exposure to market movements on its deferred compensation plan. The Company recognized approximately ~~$0.1~~$0.3 million of net unrealized ~~losses~~gains and ~~$1.1~~$1.8 million of net unrealized ~~gains~~losses related to investments classified as equity investments, at fair value during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and~~ ~~2019~~, respectively.

Investment securities classified as available-for-sale consist of U.S. Treasury notes and corporate bonds ~~and other short-term investments~~ to optimize cash management opportunities and for compliance with certain regulatory requirements. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~,2020, approximately $0.6 million of these securities was considered restricted. The Company periodically reviews each individual security position that has an unrealized loss, or impairment, to determine if that impairment is other-than-temporary. NoNaN other-than-temporary impairment charges have been recognized by the Company during the ~~nine~~three months ended~~September 30, 2020~~ March 31, 2021 and ~~2019~~.2020.

Note 6—Fair Value Measurements

Fair value is defined as the price that the Company would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A fair value hierarchy is applied that gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

The following three-tier fair value hierarchy prioritizes the inputs used in measuring fair value:

•Level 1—observable inputs such as quoted prices in active markets for identical securities;

•Level 2—other significant observable inputs (including but not limited to quoted prices for similar securities, interest rates, prepayment rates, credit risk, etc.); and

•Level 3—significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).

The following table summarizes the hierarchy of inputs used to derive the fair value of the Company’s assets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~:2020:


	March 31, 2021
	Level 1		Level 2		Level 3		Totals
	(in thousands)
Equity securities	$	5,980	$	0	$	0	$	5,980
Fixed income securities	0		5,907		0		5,907
Mutual funds	1,059		0		0		1,059

U.S. Treasury notes	0		10,959		0		10,959

Total assets at fair value	$	7,039	$	16,866	$	0	$	23,905


	September 30, 2020									December 31, 2020
	Level 1		Level 2		Level 3		Totals			Level 1		Level 2		Level 3		Totals
	(in thousands)									(in thousands)
Equity securities	$	4,992	$	—	$	—	$	4,992	Equity securities	$	5,592	$	0	$	0	$	5,592
Fixed income securities	—		7,377		—		7,377		Fixed income securities	0		6,403		0		6,403
Mutual funds	1,724		—		—		1,724		Mutual funds	1,004		0		0		1,004
U.S. Treasury notes	—		9,346		—		9,346		U.S. Treasury notes	0		10,498		0		10,498

Total assets at fair value	$	6,716	$	16,723	$	—	$	23,439	Total assets at fair value	$	6,596	$	16,901	$	0	$	23,497

December 31, 2019
Level 1 Level 2 Level 3 Totals
(in thousands)
Equity securities $ 6,038
$ —
$ —
$ 6,038
Fixed income securities —
35,057
—
35,057
Mutual funds 3,152
—
—
3,152
U.S. Treasury notes —
34,101
—
34,101
Short-term investments —
12,119
—
12,119
Total assets at fair value $ 9,190
$ 81,277
$ —
$ 90,467

~~Short-term investments consists of U.S. Treasury bills.~~

Valuations of investments in fixed income securities ~~U.S. Treasury notes~~ and U.S. Treasury ~~bills~~notes can generally be obtained through independent pricing services. For most bond types, the pricing service utilizes matrix pricing, which considers one or more of the following factors: yield or price of bonds of comparable quality, coupon, maturity, current cash flows, type and current day trade information, as well as dealer supplied prices. These valuations are categorized as Level 2 in the hierarchy.

The Company’s policy is to recognize transfers in and transfers out of the valuation levels as of the beginning of the reporting period. There were no transfers between valuation levels during the ~~nine~~three months ended ~~September 30,~~March 31, 2021.

Note 7—Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities as of March 31, 2021 and December 31, 2020. consisted of the following:


	March 31, 2021		December 31, 2020
	(in thousands)
Accrued bonus and sales commissions	$	6,427	$	19,999
Accrued payroll and benefits	3,736		4,629
Accrued sub-transfer agent fees	436		437

Amounts payable under tax receivable agreement	5,220		5,220
Short-term operating lease liabilities	2,902		2,854
Other accruals and liabilities	3,435		3,300
Total accrued expenses and other liabilities	$	22,156	$	36,439

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

~~Note 7—Accrued Expenses and Other Liabilities~~

~~Accrued expenses and other liabilities as of~~ ~~September 30, 2020~~ ~~and~~ ~~December 31, 2019~~ ~~consisted of the following:~~

September 30, 2020 December 31, 2019
(in thousands)
Accrued bonus and sales commissions $ 12,906
$ 14,825
Accrued payroll and benefits 3,932
4,415
Accrued sub-transfer agent fees 469
420
Dividends payable on Class A common stock —
312
Amounts payable under tax receivable agreement 3,960
275
Short-term operating lease liabilities 2,828
2,682
Other accruals and liabilities 5,428
3,272
Total accrued expenses and other liabilities $ 29,523
$ 26,201

Note 8—~~Leases~~

Leases

The Company has operating and finance leases for office space and certain equipment. For these leases, the office space or equipment is an explicitly identified asset within the contract. The Company has determined that it has obtained substantially all of the economic benefits from the use of the underlying asset and directs how and for what purpose the asset is used during the term of the contract.

The Company's leases have remaining lease terms ranging between approximately 1 year and 7 years. The Company's lease term on certain of its multi-year office space leases, including its headquarters, include options for the Company to extend those leases for periods ranging from an additional five to 10 years. In addition, the Company has the option to reduce a portion of its square footage at certain times throughout the term of the lease for its headquarters. The Company determined it is not reasonably certain at this time it will exercise the options to extend these leases or will exercise the options to reduce its square footage; therefore, the payment amounts related to these lease term extensions and contraction options have been excluded from determining its ROU asset and lease liability.

Certain of the Company's operating leases for office space include variable lease payments, including non-lease components (such as utilities and operating expenses) that vary based on actual expenses and are adjusted on an annual basis. The Company concluded that these variable lease payments are in substance fixed payments and included the estimated variable payments in its determination of ROU assets and lease liabilities.

Changes in the lease terms, including renewal options and options to reduce its square footage, incremental borrowing rates, and/or variable lease payments, and the corresponding impact to the ROU assets and lease liabilities, are recognized in the period incurred.

Certain of the Company's operating leases have been subleased for which the Company will receive cash totaling approximately ~~$3.5~~$3.6 million over the remaining term of such leases. The lease terms for the three subleased operating leases end in ~~2021,~~2025, 2027 and 2028.

The components of lease expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows:


	Three months ended March 31,
		2021		2020
		(in thousands)
Finance lease expense
Amortization of right-of-use assets		$	24	$	25
Interest on lease liabilities		2		2
Operating lease expense		826		792
Short-term lease expense		0		1
Variable lease expense		41		75
Sublease income		(165)		(166)
Total lease expense		$	728	$	729

Supplemental cash flow information related to leases for the three months ended March 31, 2021 and 2020 were as follows:


	Three months ended March 31,
		2021		2020
		(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases		$	2	$	2
Finance cash flows from finance leases		$	16	27
Operating cash flows from operating leases		$	946	720

Right-of-use assets obtained in exchange for new lease obligations:
Finance leases		$	0	0
Operating leases		$	38	$	136

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Finance lease expense
Amortization of right-of-use assets $ 9
$ 34
$ 57
$ 93
Interest on lease liabilities 1
4
5
9
Operating lease expense 931
904
3,151
2,762
Short-term lease expense —
3
3
10
Variable lease expense 31
139
178
250
Sublease income (136 ) (224 ) (463 ) (521 )
Total lease expense $ 836
$ 860
$ 2,931
$ 2,603

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

~~Supplemental cash flow information related to leases for the three and nine months ended September 30, 2020 and 2019 were as follows:~~

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases $ 2
$ 3
$ 6
$ 8
Finance cash flows from finance leases $ 24
$ 34
$ 76
96
Operating cash flows from operating leases $ 941
$ 1,132
$ 2,601
3,085

Right-of-use assets obtained in exchange for new lease obligations:
Finance leases $ —
$ —
$ —
175
Operating leases $ 678
$ (104 ) $ 814
$ 761

Supplemental balance sheet information related to leases as of ~~September 30, 2020~~March 31, 2021 was as follows:

(in thousands, except lease term and discount rate) September 30, 2020
Finance Leases
Finance lease right-of-use assets ⁽¹⁾
$ 131

Accrued expenses and other liabilities $ 58
Other long-term liabilities 80
Total finance lease liabilities $ 138

Operating Leases
Operating lease right-of-use assets $ 16,981

Accrued expenses and other liabilities $ 2,828
Operating lease liabilities, non-current 17,406
Total operating lease liabilities $ 20,234

Weighted average remaining lease term
Finance leases 2.56 years
Operating leases 6.72 years
Weighted average discount rate
Finance leases 5.06 %
Operating leases 5.13 %

~~_______________________~~


~~(1)~~(in thousands, except lease term and discount rate)	~~Amounts included in~~	March 31, 2021
Finance Leases
Finance lease right-of-use assets (1)		$	130

Accrued expenses and other liabilities		$	67
Other long-term liabilities		71
Total finance lease liabilities		$	138

Operating Leases
Operating lease right-of-use assets ~~within the consolidated statements of financial condition.~~		$	15,859

Accrued expenses and other liabilities		$	2,902
Operating lease liabilities, non-current		15,935
Total operating lease liabilities		$	18,837

Weighted average remaining lease term
Finance leases		2.29 Years
Operating leases		6.27 Years
Weighted average discount rate
Finance leases		4.38		%
Operating leases		5.14		%

~~Manning & Napier, Inc.~~_______________________

~~Notes to Consolidated Financial Statements (Continued)~~

(1)Amounts included in other long-term assets within the consolidated statements of financial condition.

Maturities of lease liabilities were as follows:


Twelve month period ending March 31,	Finance Leases		Operating Leases
	(in thousands)
2022	$	72	$	3,793
2023	46		3,705
2024	27		3,359
2025	0		3,235
2026	0		2,966
Thereafter	0		4,970
Total lease payments	145		22,028
Less imputed interest	(7)		(3,191)
Total lease liabilities	$	138	$	18,837

Twelve month period ending September 30, Finance Leases Operating Leases
(in thousands)
2021 $ 65
$ 3,794
2022 48
3,810
2023 27
3,481
2024 7
3,336
2025 —
3,049
Thereafter —
6,448
Total lease payments 147
23,918
Less imputed interest (9 ) (3,684 )
Total lease liabilities $ 138
$ 20,234

Note 9—Commitments and Contingencies

The Company may from time to time enter into agreements that contain certain representations and warranties and which provide general indemnifications. The Company may also serve as a guarantor of such obligations. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company expects any risk of liability associated with such guarantees to be remote.

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

Regulation

As an investment adviser to a variety of investment products, the Company and its affiliated broker-dealer are subject to routine reviews and inspections by the SEC and the Financial Industry Regulatory Authority, Inc. Additionally, the Company could be subject to non-routine reviews and inspections by the National Futures Association and U.S. Commodity Futures Trading Commission in regards to the Company’s de minimis exposure to commodity interest investments in the mutual funds and collective investment trust vehicles it operates. From time to time the Company may also be subject to claims, or be involved in various legal proceedings, arising in the ordinary course of its business and other contingencies. The Company does not believe that the outcome of any of these reviews, inspections or other legal proceedings will have a material impact on its consolidated financial statements; however, litigation is subject to many uncertainties, and the outcome of individual litigated matters is difficult to predict. The Company will establish accruals for matters that are probable, can be reasonably estimated, and may take into account any related insurance recoveries to the extent of such recoveries. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company has not accrued for any such claims, legal proceedings, or other contingencies.

Note 10—Earnings per Common Share

Basic earnings per share (“basic EPS”) is computed using the two-class method to determine net income available to Class A common stock. The two-class method includes an earnings allocation formula that determines earnings per share for each participating security according to dividends declared and undistributed earnings for the period. The Company's restricted Class A common shares granted under the Equity Plan have non-forfeitable dividend rights during their vesting period and are therefore considered participating securities under the two-class method. Under the two-class method, the Company's net income available to Class A common stock is reduced by the amount allocated to the unvested restricted Class A common stock. Basic EPS is calculated by dividing net income available to Class A common stock by the weighted average number of common shares outstanding during the period.

Diluted earnings per share (“diluted EPS”) is computed under the more dilutive of either the treasury method or the two-class method. For the diluted calculation, the weighted average number of common shares outstanding during the period is increased by the assumed conversion into Class A common stock of unvested restricted stock units, unvested restricted stock awards, and outstanding stock options (collectively, "outstanding equity awards"), as well as the exchangeable Class A units of Manning & Napier Group, to the extent that such conversion would dilute earnings per share.

Net income attributable to noncontrolling interests on the statements of operations represents the portion of earnings attributable to the economic interest of Manning & Napier Group held by the noncontrolling interests (Note 4). For periods in which the outstanding Class A Units of Manning & Napier Group are dilutive to the Company's earnings per share, the calculation of diluted earnings per share also takes into account the incremental net income that would be available to Class A common stock upon the conversion of Class A Units into Class A common stock.

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

The following is a reconciliation of the income and share data used in the basic and diluted EPS computations for the three ~~and~~ ~~nine~~ months ended~~September 30,~~ March 31, 2021 and 2020 ~~and~~ ~~2019~~ under the two-class method:


	Three months ended March 31,
		2021		2020
		(in thousands, except share data)
Numerator:
Net income attributable to controlling and noncontrolling interests		$	5,964	$	835
Less: net income attributable to noncontrolling interests		724		(23)
Net income attributable to Manning & Napier, Inc.		$	5,240	$	858
Less: allocation to participating securities		38		13
Net income available to Class A common stock for basic EPS		$	5,202	$	845
Plus: reallocation of net income attributable to participating securities		5		0
Plus: incremental net income as a result of conversion of Class A Units of Manning & Napier Group to Class A common stock		0		215
Net income available to Class A common stock for diluted EPS		$	5,207	$	1,060

Denominator:
Weighted average shares of Class A common stock outstanding - basic		17,026,500		15,812,951
Dilutive effect of outstanding equity awards		3,246,843		60,406
Dilutive effect of exchangeable Class A Units		0		62,034,200
Weighted average shares of Class A common stock outstanding - diluted		20,273,343		77,907,557
Net income available to Class A common stock per share - basic		$	0.31	$	0.05
Net income available to Class A common stock per share - diluted		$	0.26	$	0.01

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands, except share data)
Numerator:
Net income attributable to controlling and noncontrolling interests $ 3,067
$ 6,577
$ 8,185
$ 12,713
Less: net income attributable to noncontrolling interests 560
5,753
3,274
10,914
Net income attributable to Manning & Napier, Inc. $ 2,507
$ 824
$ 4,911
$ 1,799
Less: allocation to participating securities 20
—
52
(42 )
Net income available to Class A common stock for basic EPS $ 2,487
$ 824
$ 4,859
$ 1,841
Plus: reallocation of net income attributable to participating securities 3
—
4
—
Plus: incremental net income as a result of conversion of Class A Units of Manning & Napier Group to Class A common stock —
—
2,279
—
Net income available to Class A common stock for diluted EPS $ 2,490
$ 824
$ 7,142
$ 1,841

Denominator:
Weighted average shares of Class A common stock outstanding - basic 16,176,280
15,290,595
16,041,128
15,163,205
Dilutive effect of outstanding equity awards 2,752,674
310,091
1,584,781
303,134
Dilutive effect of exchangeable Class A Units —
—
30,713,850
—
Weighted average shares of Class A common stock outstanding - diluted 18,928,954
15,600,686
48,339,759
15,466,339
Net income available to Class A common stock per share - basic $ 0.15
$ 0.05
$ 0.30
$ 0.12
Net income available to Class A common stock per share - diluted $ 0.13
$ 0.05
$ 0.15
$ 0.12

Performance-based stock options are excluded from the calculation of diluted EPS for periods in which the associated market condition has not yet been achieved. As such, for the three ~~and nine~~ months ended ~~September 30, 2020, 2,022,000~~March 31, 2021, 288,000 unvested performance-based stock options were excluded, and for the three ~~and nine~~ months ended ~~September 30, 2019,~~ March 31, 2020, 3,000,000 unvested performance-based stock options were excluded from the calculation of diluted EPS.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~64,530~~232,216 and 164,696, respectively, unvested equity awards were excluded from the calculation of diluted EPS because the effect would have been anti-dilutive. For the three and nine months ended September 30, 2019, 951,060 and 1,201,060,1,276,391, respectively, unvested equity awards were excluded from the calculation of diluted EPS because the effect would have been anti-dilutive.

At ~~September 30, 2020,~~March 31, 2021, there were 2,021,781 Class A Units of Manning & Napier Group outstanding, which, subject to certain restrictions, may be exchangeable for up to an equivalent number of shares of the Company's Class A common stock. These units were not included in the calculation of diluted earnings per common share for the three months ended ~~September 30, 2020 or for the three and nine months ended September 30, 2019,~~March 31, 2021 because the effect would have been anti-dilutive.

Note 11—Equity-Based Compensation

The Equity Plan was adopted by the Company's board of directors and approved by shareholders prior to the consummation of the Company's 2011 initial public offering. Under the Equity Plan, a total of 13,142,813 equity interests are authorized for issuance, and may be issued in the form of Class A common stock, restricted stock units, stock options, units of Manning & Napier Group, or certain classes of membership interests in the Company which may convert into units of Manning & Napier Group. At ~~September 30, 2020,~~March 31, 2021, a total of ~~3,124,420~~1,998,367 equity interests were available for issuance pursuant to the Equity Plan.

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

The following table summarizes activity related to awards of restricted stock and restricted stock units (collectively, "stock awards") under the Equity Plan for the ~~nine~~three months ended ~~September 30, 2020~~:March 31, 2021:


	Stock Awards	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2021	3,044,981	$	2.03
Granted	1,152,369	$	6.04
Vested	(67,439)	$	6.56
Forfeited	(26,316)	$	1.57
Outstanding at March 31, 2021	4,103,595	$	3.08

Stock Awards Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020 1,037,901
$ 4.30
Granted 2,997,940
$ 1.58
Vested (444,165 ) $ 4.55
Forfeited (28,983 ) $ 1.58
Outstanding at September 30, 2020 3,562,693
$ 2.01

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

The weighted average fair value of stock awards granted during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was ~~$1.58,~~$6.04, based on the closing sale price of the Company's Class A common stock as reported on the New York Stock Exchange on the date of grant, and, if not entitled to dividends or dividend equivalents during the vesting period, reduced by the present value of such amounts expected to be paid on the underlying shares during the requisite service period.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the Company recorded approximately ~~$0.7~~$1.2 million and $2.5 million, respectively, of compensation expense related to stock awards under the Equity Plan. For the three and nine months ended September 30, 2019, the Company recorded approximately $0.5 million and $2.4$1.1 million, respectively, of compensation expense related to stock awards under the Equity Plan. The aggregate intrinsic value of stock awards that vested during each of the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was approximately ~~$0.9 million and $1.3 million, respectively.~~$0.5 million. As of ~~September 30, 2020,~~March 31, 2021, there was unrecognized compensation expense of approximately ~~$4.9~~$10.0 million related to stock awards, which the Company expects to recognize over a weighted average period of approximately ~~3.4~~4.2 years.

A summary of activity under the Equity Plan related to stock option awards during the three months ended March 31, 2021 is presented below:


	Stock Option Awards	Weighted Average Exercise Price		Weighted Average Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2021	2,250,000	$	2.01
Granted	0	$	0
Exercised	(1,100,000)	$	2.01
Forfeited	0	$	0
Outstanding at March 31, 2021	1,150,000	$	2.01	4.0	$	5,129
Exercisable at March 31, 2021	695,332	$	2.01	3.9	$	3,101

For each of the three months ended March 31, 2021 and 2020, the Company recorded approximately $0.1 million of compensation expense related to stock options under the Equity Plan. As of March 31, 2021, there was unrecognized compensation expense of approximately $0.1 million related to stock options, which the Company expects to recognize over a weighted average period of approximately 0.9 years.

In connection with the vesting of restricted stock units and exercise of stock options during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Company withheld a total of ~~637,359~~414,764 shares of Class A common stock to satisfy approximately ~~$1.0~~$2.9 million of employee income tax withholding requirements. These net share settlements had the effect of shares repurchased and retired by the Company, as they reduced the total number of Class A common shares outstanding.

~~A summary of activity under the Equity Plan related to stock option awards during the nine months ended September 30, 2020 is presented below:~~

Stock Option Awards Weighted Average Exercise Price
Weighted Average Contractual Term
(years)

Aggregate
Intrinsic
Value
(in thousands)
Outstanding at January 1, 2020 3,500,000
$ 2.01

Granted —
$ —

Exercised (850,000 ) $ 2.01

Forfeited —
$ —

Outstanding at September 30, 2020 2,650,000
$ 2.01
4.1 $ 5,989
Exercisable at September 30, 2020 294,666
$ 2.01
4.0 $ 666

For the three and nine months ended September 30, 2020, the Company recorded approximately $0.1 million and $0.4 million, respectively, of compensation expense related to stock options under the Equity Plan. For the three and nine month periods ended September 30, 2019, the Company recorded approximately $0.2 million and $0.4 million of compensation expense related to stock options under the Equity Plan. As of September 30, 2020, there was unrecognized compensation expense of approximately $0.5 million related to stock options, which the Company expects to recognize over a weighted average period of approximately 1.0 year.

Note 12—Income Taxes

The Company is comprised of entities that have elected to be treated as either a limited liability company ("LLC") or a “C-Corporation". As such, the entities functioning as LLCs are not liable for or able to benefit from U.S. federal and most state income taxes on their earnings, and earnings (losses) will be included in the personal income tax returns of each entity’s unit holders. The entities functioning as C-Corporations are liable for or able to benefit from U.S. federal and state and local income taxes on their earnings and losses, respectively.

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~On March 27, 2020,~~In calculating the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") which includes, among other things, the ability to carryback net operating losses from 2018, 2019 and 2020 to prior years. As of December 31, 2019,provision for income taxes, the Company had approximately $12.1 million net operating losses available to offset future taxable income for federal income tax purposes and approximately $6.1 million for state income tax purposes. The Company expects to carryback net operating losses generated in 2018 and 2019 to prior years and claim refunds whenuses an estimate of the ~~federal corporate~~annual effective tax rate ~~was 34%~~based upon the facts and circumstances at each interim period. On a quarterly basis, the estimated annual effective tax rate is adjusted, as appropriate, based upon changes in facts and circumstances, if any, as compared to those forecasted at the current statutory rates of 21%. During the nine months ended September 30, 2020, the Company recognized an income tax benefit of approximately $2.3 million, related to the favorable rate applied to its net operating losses. As a result, the Company increased its deferred tax asset during the nine months ended September 30, 2020 related to the TRA by approximately $2.3 million, resulting in a $1.9 million increasebeginning of the ~~liability, representing 85% of the applicable cash savings.~~fiscal year and at each interim period thereafter.

On May 11, 2020, the Company completed the redemption and subsequent retirement of 60,012,419 Class A units, resulting in the Company's ownership of Manning & Napier Group increasing from 19.5% to 88.2% (Refer to Note 4). The Company recognized a deferred tax asset of approximately $1.1 million, resulting from an increased share of Manning & Napier Group's deferred tax assets. Additionally, as a result of Manning & Napier Group's redemption of its Class A units on May 11, 2020 and Manning & Napier Group's election under Section 754 of the Internal Revenue Code ("IRC"), the Company expects to benefit from depreciation and amortization deductions resulting from increases in the tax basis of tangible and intangible assets of Manning & Napier Group. Those deductions allocated to the Company will be taken into account in reporting the Company's taxable income resulting in the recognition of a deferred tax asset of approximately $2.5 million. The aggregate $3.6 million of deferred tax assets recognized during the three months ended June 30, 2020 resulting from the redemption were recorded within the Company's consolidated statements of shareholder's equity.

The Company’s income tax provision (benefit) and effective tax rate were as follows:


	Three months ended March 31,
		2021			2020
		(in thousands)
Income (loss) before provision for (benefit from) income taxes		$	6,667		$	(2,391)
Effective tax rate		10.5		%	134.9		%
Provision for (benefit from) income taxes		703			(3,226)
Provision for (benefit from) income taxes at statutory rate		1,400			(502)
Difference between tax at effective vs. statutory rate		$	(697)		$	(2,724)

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Income before provision for (benefit from) income taxes $ 4,805
$ 6,727
$ 8,157
$ 13,436
Effective tax rate 36.2 % 2.2 % (0.3 )% 5.4 %
Provision for (benefit from) income taxes 1,738
150
(28 ) 723
Provision for (benefit from) income taxes at statutory rate 1,009
1,413
1,713
2,822
Difference between tax at effective vs. statutory rate $ 729
$ (1,263 ) $ (1,741 ) $ (2,099 )

~~For the nine months ended September 30, 2020 and the three and nine months ended September 30, 2019, the difference between the Company’s recorded~~The provision ~~(benefit) and the provision that would result from applying the U.S. statutory rate of 21%~~for (benefit from) income taxes includes ~~the~~a benefit ~~resulting from~~attributable to the fact that ~~a significant portion of~~ the Company’s operations include a series of flow-through entities which are generally not subject to federal and most state income taxes. Accordingly, a

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

portion of the Company’s earnings are not subject to corporate level taxes. The Company recognized a reduced benefit from the flow-through entities during the three months ended March 31, 2021 compared to March 31, 2020 due to a higher portion of Manning & Napier Group's earnings subject to taxation at the C-Corporation level attributed to Manning & Napier Inc.'s increased ownership of Manning & Napier Group as of March 31, 2021 compared to March 31, 2020.

In addition, the effective rate during the three months ended ~~September 30, 2020~~March 31, 2021 is ~~higher~~lower than the statutory rate of 21% due to the incremental tax benefits realized from the exercise of stock option awards, partially offset by the impacts from permanent differences between book and tax, including but not limited to Section 162(m) of the IRC which limits the annual amount of deductible compensation.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the income tax benefit also includes the impact from the enactment of the Coronavirus Aid, Relief, and Economic Security Act ("CARES ~~Act,~~Act") on March 27, 2020 which ~~resulted in~~includes, among other things, the ~~recognition~~ability to carryback net operating losses from 2018, 2019 and 2020 when the federal tax rate was 34% compared to the current statutory rates of 21%. As a result, the Company recognized an income tax benefit ~~based on~~related to the ~~ability~~favorable rate applied to ~~carry back~~its net operating ~~losses to prior years.~~losses.

A state is currently auditing the Company's 2016, 2017 and 2018 corporate tax returns. The audit is expected to be completed in ~~2020.~~2021. As of ~~September 30, 2020,~~March 31, 2021, the audit is in process and the state is collecting and evaluating the data for which the Company has not recorded a liability for uncertain tax positions under ASC Topic 740, Income Taxes. The Company believes any potential increases to this liability, which could be up to approximately $1.3 million, would not result in a material change to its financial position.

Note 13—Related Party Transactions

Transactions with noncontrolling members

From time to time, the Company may be asked to provide certain services, including accounting, legal and other administrative functions for the noncontrolling members of Manning & Napier Group. While immaterial, the Company has not received any reimbursement for such services.

The Company manages the personal funds of certain of the Company's executive officers and directors and/or their affiliated entities. Pursuant to the respective investment management agreements, in some instances the Company may waive or reduce its regular advisory fees for these accounts. The aggregate value of the fees earned ~~and the value of fees waived~~ was less than $0.1 million for each of the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~

~~Manning & Napier, Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

Manning & Napier Group completed the redemption of 60,012,419 Class A units held by the noncontrolling members of Manning & Napier Group, including 59,957,419 units held by William Manning, who was previously the Chairman of the Company's Board of Directors on May 11, 2020. The independent directors, on behalf of the Company, decided to settle the transaction utilizing approximately $90.8 million in cash, including approximately $90.7 million paid to Mr. Manning. Manning & Napier Group completed the redemption with payment made from its cash, cash equivalents and proceeds from the sale of investment securities. See Note 4NaN fees were waived for ~~additional details.~~

~~During~~ the three months ended ~~September 30, 2020,~~March 31, 2021 and the ~~Company entered into an agreement with Manning Ventures, Inc., which is wholly-owned by William Manning, to reimburse Manning Ventures, Inc. up to approximately $0.2~~aggregate value of the fees waived was less than $0.1 million for ~~certain services.~~the three months ended March 31, 2020.

Affiliated fund transactions

The Company earns investment advisory fees, distribution fees and administrative service fees under agreements with affiliated mutual funds and collective investment trusts. Fees earned for advisory and distribution services provided were approximately ~~$9.3 million and $26.7~~$9.9 million for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, and ~~approximately $9.8 million and $31.1~~$8.9 million for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. Fees earned for administrative services provided were approximately $0.2 million and $0.4 million, ~~and $1.2 million~~respectively, for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021 and ~~approximately $0.6 million and $1.6 million for the three and nine months ended September 30, 2019.~~2020. See Note 3 for disclosure of amounts due from affiliated mutual funds and collective investment trusts.

The Company incurs certain expenses on behalf of the collective investment trusts and has contractually agreed to limit its fees and reimburse expenses to limit operating expenses incurred by certain affiliated fund series. The aggregate value of fees waived and expenses reimbursed to, or incurred for, affiliated mutual funds and collective investment trusts were approximately ~~$1.3 million and $3.7~~$0.5 million for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~$1.9 million and $5.1~~$1.2 million for the three ~~and nine~~ months ended ~~September 30, 2019.~~

During the three months ended September 30, 2020 the Company received approximately $1.4 million in cash for reimbursement of prior expenses paid on behalf of our affiliated mutual funds and collective investment trusts. These expenses are reimbursable to the Company under an agreement with the affiliated mutual fund and collective investments trusts upon the settlement of a claim between both the affiliated mutual funds and the collective investment trusts and a third party. As of June 30, 2020, the Company had recorded a receivable of approximately $0.2 million within other long-term assets on its consolidated statement of financial condition. The remaining $1.2 million of proceeds received was recognized as a gain within other operating costs in its consolidated statements of operations during the nine months ended September 30,March 31, 2020.

Note 14—Subsequent Events

Distribution

Subsequent to ~~September 30, 2020,~~March 31, 2021, the Board of Directors approved a ~~$1.3~~$2.5 million distribution from Manning & Napier Group to Manning & Napier and the noncontrolling interests of Manning & Napier Group, of which approximately ~~$0.1~~$0.3 million was paid to the noncontrolling members of Manning & Napier Group.

Exchange of Class A units of Manning & Napier Group

As of March 31, 2021, a total of 2,021,781 units of Manning & Napier Group were held by the noncontrolling interests. Pursuant to the terms of the Exchange Agreement, such units may be tendered for exchange or redemption. In connection with the exchange, the Company has the ability to pay an amount of cash equal to the number of units tendered multiplied by the 15 day average value of one share of the Company's Class A common stock between February 22, 2021 and March 12, 2021 less a

Manning & Napier, Inc.

Notes to Consolidated Financial Statements (Continued)

market discount and expected expenses, or at the Company's election issue shares of Class A common stock on a one-for-one basis for each unit tendered.

On March 15, 2021, the Company received notice that 1,592,969 of Class A units of Manning & Napier Group were tendered for redemption or exchange. The independent directors, on behalf of the Company, have decided that such exchange will be settled in 1,592,969 shares of unregistered Class A Common Stock of the Company. The Company expects the settlement of the exchange to occur later in the year. As a result of the exchange, Manning & Napier, Inc. will acquire an equivalent number of Class A units of Manning & Napier Group, resulting in an increase in its ownership of Manning & Napier Group from approximately 88.9% to 98%.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which reflect the views of Manning & Napier, Inc. ("we," "our," or "us") with respect to, among other things, our future operations and financial performance. Words like "believes," "expects," "may," "estimates," "will," "should," "could," "intends," "likely," "plans," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, are used to identify forward-looking statements, although not all forward-looking statements contain these words.

Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ materially from our expectations or beliefs are ~~summarized below under the heading "Summary of Principal Risks" and~~ disclosed in the “Risk Factors” section, as well as other sections, of our Annual Report on Form 10-K which include, without limitation: changes in securities or financial markets or general economic conditions; the impact of the COVID-19 pandemic and ~~this Quarterly Report~~related recovery efforts on ~~Form 10-Q.~~the U.S. and global economy; a decline in the performance of our products; client sales and redemption activity; any loss of an executive officer or key personnel; changes in our business related to strategic acquisitions and other transactions; and changes of government policy or regulations. All forward-looking statements speak only as of the date on which they are made and we undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

~~Summary of Principal Risks~~

The following factors are among the principal risks we face. For a more detailed description of the risks material to our business, see "Part II-Item 1A-Risk Factors." Some of the factors that could cause our results to differ materially from our expectations or beliefs include, without limitation;

~~the impact of the COVID-19 pandemic on the U.S. and global economy and our AUM;~~

~~the termination of contracts or relationships upon short or no notice or high rates of client sales and redemption activity;~~

~~the inability to realize the expected benefits of our restructuring plan and other operational improvement initiatives;~~

difficult market conditions, like those during the COVID-19 pandemic, impacting the performance of our strategies, impacting our ability to obtain attractive returns, or reducing our ability to deploy capital;

~~any loss of key investment and sales professionals or members of senior management, or difficulty integrating new executives;~~

~~concentration of our AUM in certain investment strategies or in certain geographic areas;~~

the impact on our portfolios of foreign currency exchange risk and the impact of any foreign tax, political, social and economic uncertainty on any non-U.S. issuers in which our portfolios have invested;

~~a reduction in the fees we are able to charge, increased expenses or reduced fee income from new products, or potential losses or failure of new products or portfolios;~~

~~changes in key distribution relationships that reduce our revenues or increase the influence of third-party intermediaries on our mutual fund assets;~~

~~failure to comply with investment guidelines set by our clients or limitations imposed by law;~~

the occurrence of operational or trading errors due to the failure, interruption or cessation of our or third-party financial, accounting, trading, custodial, clearing, compliance and other data processing systems;

~~the failure to effectively maintain, enhance and modernize our information technology systems and develop or deploy new technology platforms and upgrades;~~

~~cybersecurity breaches impacting our operations or the failure to implement effective information and cybersecurity policies;~~

~~reputational harm caused by employee misconduct or the failure to properly address conflicts of interest;~~

~~the inability to insure our business and otherwise manage risks;~~

~~the failure to comply with extensive regulatory requirements and changes in government policy;~~

~~the inability to effectively compete in the investment management industry;~~

~~catastrophic and unpredictable events, such as the COVID-19 pandemic, terrorist attacks and natural disasters;~~

~~our dependence on Manning & Napier Group, LLC (“Manning & Napier Group”) for distributions to pay expenses and dividends, if any, to our stockholders;~~

~~our obligation to make payments to holders of units of Manning & Napier Group for tax benefits we receive as a result of our structure pursuant to a tax receivable agreement; and~~

provisions in our corporate documents, stockholder rights plan and Delaware law that could discourage, delay or prevent a change in control of the Company that some stockholders might consider to be in their best interests.

Overview

Our Business

Manning & Napier, Inc. is an independent investment management firm that provides our clients with a broad range of financial solutions and investment strategies. Founded in 1970 and headquartered in Fairport, New York, we serve a diversified client base of high-net-worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans, endowments and foundations. Our investment strategies offer equity, fixed income and a range of blended asset portfolios by employing traditional and quantitative approaches.

Impact of COVID-19

We are ~~addressing~~continuing to address the challenges of COVID-19 by protecting the health and well-being of our employees, while servicing our clients and leveraging technology to fully support our business needs in a primarily digital manner.

~~The~~As the economy and financial markets continue recovering from the impact of COVID-19, we expect our business to gradually return to a pre-pandemic, ‘normal’ state. More directly, any potential near-term impacts of COVID-19 on our investment performance, financial statements, capital and liquidity, and our business operations are ~~further discussed below:~~

~~Client Performance Impact:As a result of our ability to rapidly adapt to a remote work environment,~~lessening, and we believe we were able to minimize the impact of COVID-19 on client performance. Additionally, due to the significant increase in volatility throughout the year, discussed in more detail in the next section, we were able to capitalize on the market environment by delivering strong results for clients year-to-date.

~~Financial Statement Impact:~~ Our revenues consist primarily of investment management fees typically calculated as a percentage of the market value of our assets under management ("AUM"), and they are dependent on the value and composition of our AUM. As of September 30, 2020, AUM was $19.2 billion,it is no longer an increase from $17.1 billion as of March 31, 2020. This 13% increase came on the heels of a market rebound primarily beginning in the second quarter, with approximately $3.2 billion of market appreciation partially offset by approximately $1.0 billion of net client outflows since March 31, 2020. Going forward, we believe the pandemic may continue to negatively impact our operational results, cash flows, and financial position, although we cannot reasonably estimate the full impact at this time, given the uncertainty surrounding the duration and severity of the economic crisis.

~~Capital and Liquidity Impact:~~ Our financial condition is stable, allowing us to effectively manage the financial impacts of COVID-19. We believe our capital structure should provide us with sufficient resources and flexibility to meet present and future cash needs. During the first quarter of 2020, we suspended the quarterly cash dividend on our Class A common stock. ~~Given the uncertainty surrounding the current economic environment, we will continue to assess our liquidity needs.~~

~~Business Operations Impact:~~ For the health and well-being of our employees, we have modified our business practices in accordance with social distancing guidelines to encourage work-from-home arrangements, and we have restricted business-related travel. Our technology capabilities have allowed us to maintain sales and client servicing activity through digital collaboration platforms and digital marketing efforts. We believe our third quarter 2020 results, with gross client inflows comparable to prior periods and gross client outflows reduced from historical levels, indicate that our sales strategy is gaining traction. Our ability to adequately maintain our operations, internal controls and client relationships has not been adversely affected by these modifications.

immediate concern.

We continue to assess the risks associated with COVID-19 and to mitigate them where possible. For further discussion regarding the potential future impacts of COVID-19 and related economic conditions on the Company's financial statements, capital and liquidity, and business operations, see ~~"Part II-Item 1A-Risk Factors."~~

the "Risk Factors" section of our Annual Report on Form 10-K.

Market Developments

First quarter financial market performance was decidedly mixed as another strong quarter of equity market returns was partially offset by one of the most difficult three-month stretches for aggregate US fixed income in decades, catalyzed by a substantial move higher in US Treasury interest rates.

The ~~third~~post-pandemic stock market recovery persisted to open 2021 as the vaccine rollout, partial economic re-openings, and rising expectations for strong economic growth ahead powered equities higher. Gains were led by stocks in the value-style and of smaller capitalization, a continuation of a trend reversal first experienced at the tail end of last year. Internationally, equity returns were broad-based, stretching between both developed and emerging market economies. Despite improving expectations for economic growth, equity market valuations remain elevated.

Within fixed income, market expectations for potentially stronger economic growth and higher inflation drove yields significantly higher in mid- to long-end of the curve. Rising rates were an immediate challenge to performance for the quarter ~~was fairly calm~~but set the stage for potential higher yields in the future. At the same time, further progress along the economic recovery led credit spreads to tighten, and they are now near historic lows throughout credit markets, including both investment-grade and below-investment-grade corporate bonds, as well as in municipal securities.

In general, we believe there are now clear excesses visible in global financial ~~markets as~~markets. The confluence of a variety of speculative events occurring last quarter was troubling, more so than the ~~economy began recovering from the pandemic-driven shutdowns. Although the rebound~~already concerning absolute valuation of stocks or

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bonds. While we recognize that we are in the ~~global macroeconomy has been relatively strong, there remain areas~~midst of ~~weakness, exacerbated by the sunsetting of key stimulus programs.~~

~~The continued strength in equity markets remains extraordinary~~an enormous economic and ~~historic, driven to~~earnings boom, we believe that a more muted outlook for medium-term returns is appropriate and suspect that a substantial ~~degree by enormous strength in the growth style. Growth’s multi-year run~~equity air pocket is, at some point, likely and would be a healthy clearing of outsized relative results versus value were further extended in the quarter, and the style holds a very substantial year-to-date performance edge, concentrated in technology-related equities. Amid the broad-based strength, domestic equities again outperformed international peers, and within the US specifically, small-cap stocks underperformed large-caps over the quarter.

Regarding fixed income, central bank policies continued to pin interest rates at ultra-low levels, leading to little movement in yield curves over the quarter. Moving out on the risk spectrum, credit spreads continued to compress throughout the quarter, significantly aiding performance for investment grade and below investment grade securities. Falling spreads aided municipal bonds as well, leading to good results for the sector.

We believe there remains a sharp divergence between underlying economic fundamentals and the historic rally in financial markets. As these two realities converge over time, we believe our truly active investment approach, powered by dynamic asset allocation, is well positioned to capitalize on potential opportunities as they present themselves.excess.

Other Business Updates

On February 3, 2021, the Board of Directors approved a share repurchase program authorizing the purchase of up to $10.0 million of Manning & Napier Inc. Class A common shares. Given the strength of our balance sheet and cash position, the Company plans to use the approved share repurchase program to, at a minimum, offset dilution created from the awards issued under the Company’s long-term incentive plan to our employees during the first quarter of 2021. These equity awards were valued at approximately $6.0 million and will vest over the next 5 years. The authority to repurchase shares will be exercised from time to time as market conditions warrant, is subject to regulatory considerations and will expire on December 31, 2021. The timing, amount, and other terms and conditions of any repurchases will be determined by management at its discretion based on a variety of factors, including the market price of shares, general market and economic conditions, and legal requirements. The repurchase program may be modified, discontinued or suspended at any time. We currently intend to fund the program through cash on hand and future cash flow. During the first quarter of ~~2020,~~2021, Manning & Napier, Inc. purchased a total of 412,405 Class A common shares using approximately $3.0 million in cash.

Also during the first quarter of 2021, pursuant to the ~~annual exchange process, approximately 60.0 million~~terms of the Exchange Agreement between the Company and the holders of its non-controlling interests, 1,592,969 Class A ~~Units~~units of Manning & Napier Group ~~LLC ("Manning & Napier Group")~~ were tendered for cash or shares of the Company's Class A common stock. ~~In early April 2020, the~~The independent directors, on behalf of the Company, ~~as managing member~~have decided that such exchange will be settled in 1,592,969 shares of unregistered Class A Common Stock of the Company. The Company expects the settlement of the exchange to occur later in the year. As a result of the exchange, Manning & Napier, Inc. will acquire an equivalent number of Class A units of Manning & Napier Group, ~~decided to settle the transaction as a redemption, utilizing approximately $90.8 million~~resulting in ~~cash. Manning & Napier Group completed the redemption on May 11, 2020, with payment made from~~an increase in its ~~cash, cash equivalents and proceeds from the sale of investment securities. The Class A Units were subsequently retired, and as a result, our~~ ownership of Manning & Napier Group ~~increased~~ from ~~19.5%~~approximately 89% to ~~88.2%~~98%.

Our Solutions

We derive substantially all of our revenues from investment management fees earned from providing advisory services to separately managed accounts and to mutual funds and collective investment trusts—including those offered by Manning & Napier Advisors, LLC ("MNA"), the Manning & Napier Fund, Inc. (the "Fund"), Exeter Trust Company, and Rainier Investment Management, LLC ("Rainier").

Our separate accounts are primarily distributed through our wealth management sales channel, where our financial consultants form relationships with high-net-worth individuals, endowments, foundations, and retirement plans. To a lesser extent, we also obtain a portion of our separate account distribution via third parties, either through our intermediary sales channel where national brokerage firm representatives or independent financial advisors select our separate account strategies for their clients, or through our platform/sub-advisor relationships, where unaffiliated registered investment advisors approve our strategies for their product platforms. Our separate account strategies are a primary driver of our blended asset portfolios for high-net-worth, middle market institutional clients and financial intermediaries. In contrast, larger institutions and unaffiliated registered investment advisor platforms are a driver of our separate account equity portfolios.

Our mutual funds and collective investment trusts are distributed through financial intermediaries, including brokers, financial advisors, retirement plan advisors and platform relationships. We also distribute our mutual fund and collective investment trusts through our institutional representatives, particularly within the defined contribution, Taft-Hartley, and institutional marketplace. Our mutual fund and collective investment trust strategies are an important driver of our blended asset class and single asset class portfolios.

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Assets Under Management

~~During 2019, we changed our distribution strategy following a business review to better capitalize on our strengths. As part of this change, we have adjusted our~~Our sales efforts ~~to more~~ distinctly separate the Wealth Management clients to which we deliver holistic solutions, including high-net-worth families, endowments and foundations, and small and mid-sized business, from our Institutional and Intermediary clients, including third party advisors, platforms and consultants, as well as larger institutions and Taft-Hartley clients. ~~Our AUM was $19.2 billion as of September 30, 2020.~~ The table below reflects the estimated composition of our ~~AUM~~assets under management as of March 31, 2021, by sales channel and ~~portfolio is illustrated in the table below:~~investment portfolio:


	September 30, 2020													March 31, 2021
	Blended Asset			Equity			Fixed Income			Total				Blended Asset			Equity			Fixed Income			Total
	(dollars in millions)													(dollars in millions)
Total AUM													Total AUM
Wealth Management	$	7,331.6		$	510.5		$	260.5		$	8,102.6		Wealth Management	$	8,042.6		$	925.9		$	249.0		$	9,217.5
Institutional and Intermediary	6,036.1			4,362.0			744.4			11,142.5			Institutional and Intermediary	6,095.9			5,056.7			769.7			11,922.3

Total	$	13,367.7		$	4,872.5		$	1,004.9		$	19,245.1		Total	$	14,138.5		$	5,982.6		$	1,018.7		$	21,139.8
Percentage of AUM													Percentage of AUM
Wealth Management	38		%	3		%	1		%	42		%	Wealth Management	38		%	4		%	1		%	43		%
Institutional and Intermediary	32		%	22		%	4		%	58		%	Institutional and Intermediary	29		%	24		%	4		%	57		%

Total	70		%	25		%	5		%	100		%	Total	67		%	28		%	5		%	100		%
Percentage of portfolio by channel													Percentage of portfolio by channel
Wealth Management	55		%	10		%	26		%	42		%	Wealth Management	57		%	15		%	24		%	44		%
Institutional and Intermediary	45		%	90		%	74		%	58		%	Institutional and Intermediary	43		%	85		%	76		%	56		%

Total	100		%	100		%	100		%	100		%	Total	100		%	100		%	100		%	100		%
Percentage of channel by portfolio													Percentage of channel by portfolio
Wealth Management	91		%	6		%	3		%	100		%	Wealth Management	87		%	10		%	3		%	100		%
Institutional and Intermediary	54		%	39		%	7		%	100		%	Institutional and Intermediary	52		%	42		%	6		%	100		%

Our wealth management channel represented ~~42%~~44% of our total AUM as of ~~September 30, 2020.~~March 31, 2021. Blended portfolios are the most significant portion of wealth management assets, representing ~~91%~~87% of wealth management AUM. Equity and fixed income portfolios represent 6%10% and 3%, respectively, of wealth management AUM.

Our institutional and intermediary channel represented ~~58%~~56% of our total AUM as of ~~September 30, 2020.~~March 31, 2021. Blended portfolios are also the largest portion of institutional and intermediary assets at ~~54%~~52% of AUM, followed by equity and fixed income portfolios at ~~39%~~42% and 7%6%, respectively.

As of ~~September 30, 2020,~~March 31, 2021, blended portfolios account for ~~70%~~67% of our total AUM at ~~$13.4~~$14.1 billion, a 2%4% increase from ~~June 30,~~December 31, 2020 when blended assets were ~~$13.1~~$13.6 billion. Blended portfolio AUM is similar across both distribution channels, with ~~55%~~57% in wealth management and ~~45%~~43% in institutional and intermediary. Equity portfolios account for ~~25%~~28% of our total AUM, at ~~$4.9~~$6.0 billion, a 7%8% increase from ~~June 30,~~December 31, 2020 when equity portfolios were at ~~$4.6~~$5.5 billion. Of equity portfolio AUM, ~~90%~~85% is in the institutional and intermediary channel, and ~~10%~~15% is in the wealth management channel. Fixed income portfolios account for 5% of total AUM at $1.0 billion, consistent with ~~June 30,~~December 31, 2020. Similar to equity portfolio AUM, the majority of fixed income assets come through the institutional and intermediary channel at ~~74%~~76%, and ~~26%~~24% of fixed income AUM is in the wealth management channel.

During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, our wealth management sales channel contributed 36% of our total gross client inflows, while our institutional and intermediary channel contributed 64%. Of the ~~$1.8~~$0.6 billion in gross client inflows, blended asset portfolios represented ~~69%~~61%, while equity and fixed income portfolios represented ~~24%~~30% and 7%9%, respectively.

Results of Operations

Below is a discussion of our consolidated results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019~~.2020.

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Components of Results of Operations

Overview

~~An important factor~~One of the most significant factors influencing ~~inflows~~net flows and ~~outflows of our~~ AUM is the investment performance of our various strategies. As an active manager, it is typical for our investment ~~approaches. Our stock selection~~ strategies ~~absolute pricing discipline~~to exhibit portfolio positioning that is notably divergent from benchmarks and ~~active asset allocation generally~~common market indices. We believe this is a strength of our investment approach, although it can cause substantial performance deviations, both positive and negative, versus common benchmarks. In general, our investment processes have a preference for risk management, focusing heavily on fundamentals and valuations. Historically, we have tended to provide a degree of downside protection in adverse markets, while having participated somewhat less than fully in bull markets. Broadly speaking, we expect our investment approach to reduce volatility and create a smoother performance pattern over time, and we believe these characteristics are desirable and an attractive differentiator in our industry. As a result, the overall performance of our suite of investment strategies often differs from many others in specific absolute and relative return characteristics in different market environments. For example, during a fundamental-driven bull market when prices are rising alongside improving fundamentals, we are likelythe industry, potentially causing the results of our operations to, experience positive absolute returns and competitive relative returns. However, in a more momentum-driven bull market, when prices become disconnected from underlying fundamentals, or narrow market environment where a small handful of stocks outperform the average stock, we are likely to experience positive absolute returns but lagging relative returns. Similarly, during a valuation-driven bear market, when markets experience a period of price correction following a momentum-driven bull market, we are likely to experience negative absolute returns but strong relative returns. However, in a momentum-driven bear market, which is typically characterized by broad price declines in a highly correlated market, we are likely to experience negative absolute returns and potentially lagging relative returns. Essentially, our approach is likely to do well when markets are driven by fundamentals, but lag when markets are driven primarily by momentum.at times, also diverge.

Other components impacting our operating results include:

•asset-based fee rates and changes in those rates;

•the composition of our AUM among various portfolios, vehicles and client types;

•changes in our variable costs, including incentive compensation and distribution, servicing and custody expenses, which are affected by our investment performance, level of our AUM and revenue; and

•fixed costs, including changes to base compensation, vendor-related costs and investment spending on new products.

Assets Under Management and Investment Performance

The following table reflects the indicated components of our AUM for our sales channels for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019~~:2020:


																	Sales Channel (4)
																	Wealth Management		Institutional and Intermediary		Total		Wealth Management		Institutional and Intermediary		Total
																			(in millions)
As of December 31, 2020																As of December 31, 2020	$	8,906.4	$	11,213.0	$	20,119.4	44	%	56	%	100	%
Gross client inflows (1)																Gross client inflows (1)	224.8		401.6		626.4
Gross client outflows (1)																Gross client outflows (1)	(305.3)		(453.5)		(758.8)

Market appreciation/(depreciation) & other (2)(3)																Market appreciation/(depreciation) & other (2)(3)	391.6		761.2		1,152.8
As of March 31, 2021																As of March 31, 2021	$	9,217.5	$	11,922.3	$	21,139.8	44	%	56	%	100	%
Average AUM for period																Average AUM for period	$	8,993.0	$	11,454.3	$	20,447.3

As of December 31, 2019																As of December 31, 2019	$	8,716.4	$	10,763.7	$	19,480.1	45	%	55	%	100	%
Gross client inflows (1)																Gross client inflows (1)	202.1		466.7		668.8
Gross client outflows (1)																Gross client outflows (1)	(375.3)		(753.9)		(1,129.2)
Market appreciation/(depreciation) & other (2)																Market appreciation/(depreciation) & other (2)	(810.3)		(1,148.9)		(1,959.2)
As of March 31, 2020																As of March 31, 2020	$	7,732.9	$	9,327.6	$	17,060.5	45	%	55	%	100	%
Average AUM for period																Average AUM for period	$	8,527.9	$	10,136.2	$	18,691.1

	Sales Channel ⁽⁴⁾
	Wealth Management			Institutional and Intermediary			Total			Wealth Management		Institutional and Intermediary		Total
				(in millions)
As of June 30, 2020	$	8,334.4		$	10,305.9		$	18,640.3		45	%	55	%	100	%
Gross client inflows ⁽¹⁾	250.7			343.7			594.4
Gross client outflows ⁽¹⁾	(304.9		)	(674.8		)	(979.7		)
AUM Reclassification ⁽³⁾	(266.8		)	266.8			—
Market appreciation/(depreciation) & other ⁽²⁾	89.2			900.9			990.1
As of September 30, 2020	$	8,102.6		$	11,142.5		$	19,245.1		42	%	58	%	100	%
Average AUM for period	$	8,093.3		$	11,129.6		$	19,222.9

As of June 30, 2019	$	9,397.9		$	11,852.9		$	21,250.8		44	%	56	%	100	%
Gross client inflows ⁽¹⁾	231.6			372.1			603.7
Gross client outflows ⁽¹⁾	(664.7		)	(972.3		)	(1,637.0		)
Market appreciation/(depreciation) & other ⁽²⁾	(589.9		)	845.6			255.7
As of September 30, 2019	$	8,374.9		$	12,098.3		$	20,473.2		41	%	59	%	100	%
Average AUM for period	$	8,559.4		$	12,317.3		$	20,876.7

	Wealth Management			Institutional and Intermediary			Total			Wealth Management		Institutional and Intermediary		Total
				(in millions)
As of December 31, 2019	$	8,716.4		$	10,763.7		$	19,480.1		45	%	55	%	100	%
Gross client inflows ⁽¹⁾	646.1			1,169.9			1,816.0
Gross client outflows ⁽¹⁾	(1,040.9		)	(2,279.6		)	(3,320.5		)
Market appreciation/(depreciation) & other ⁽²⁾	(219.0		)	1,488.5			1,269.5
As of September 30, 2020	$	8,102.6		$	11,142.5		$	19,245.1		42	%	58	%	100	%
Average AUM for period	$	7,903.8		$	10,869.2		$	18,773.0

As of December 31, 2018	$	8,700.9		$	11,462.7		$	20,163.6		43	%	57	%	100	%
Gross client inflows ⁽¹⁾	621.7			1,253.1			1,874.8
Gross client outflows ⁽¹⁾	(1,550.7		)	(2,782.0		)	(4,332.7		)
Market appreciation/(depreciation) & other ⁽²⁾	603.0			2,164.5			2,767.5
As of September 30, 2019	$	8,374.9		$	12,098.3		$	20,473.2		41	%	59	%	100	%
Average AUM for period	$	8,515.5		$	12,301.4		$	20,816.9

________________________


~~(1)~~	~~Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.~~


~~(2)~~	Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.


~~(3)~~	During the third quarter of 2020, the Company identified certain Institutional and Intermediary assets that were incorrectly allocated to the Wealth Management Sales Channel as of June 30, 2020. The difference had no impact to total AUM or AUM by Portfolio as of June 30, 2020 and were reclassified to the appropriate Sales Channel during the third quarter of 2020.

(1)Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.


~~(4)~~	AUM and gross client flows between sales channels have been estimated based upon preliminary data. For a limited portion of our mutual fund AUM, reporting by sales channel is not available at the time of this report. Such estimates have no impact on total AUM, total cash flows, or AUM by investment portfolio reported in the table above.

(2)Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.

(3)Beginning in March 2021, AUM includes assets associated with our model-delivery business, previously classified as assets under advisement. These assets totaled $429.9 million at December 31, 2020, comprised of $62.5 million in our wealth management channel and $367.4 million in our institutional and intermediary channel. These amounts are included above in market appreciation (depreciation) and other for the first quarter of 2021.

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(4)AUM and gross client flows between sales channels have been estimated based upon preliminary data. For a limited portion of our mutual fund AUM, reporting by sales channel is not available at the time of this report. Such estimates have no impact on total AUM, total cash flows, or AUM by investment portfolio reported in the table above.

The following table reflects the indicated components of our AUM for our portfolios for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


																						Blended Asset		Equity		Fixed Income		Total		Blended Asset		Equity		Fixed Income		Total
	Blended Asset			Equity			Fixed Income			Total			Blended Asset		Equity		Fixed Income		Total					(in millions)
				(in millions)
As of June 30, 2020	$	13,075.3		$	4,561.7		$	1,003.3		$	18,640.3		71	%	23	%	6	%	100	%
As of December 31, 2020																					As of December 31, 2020	$	13,558.8	$	5,545.3	$	1,015.3	$	20,119.4	67	%	28	%	5	%	100	%
Gross client inflows ⁽¹⁾	461.3			104.2			28.9			594.4											Gross client inflows (1)	379.8		187.6		59.0		626.4
Gross client outflows ⁽¹⁾	(756.6		)	(191.4		)	(31.7		)	(979.7		)									Gross client outflows (1)	(501.2)		(200.1)		(57.5)		(758.8)
Market appreciation/(depreciation) & other ⁽²⁾	587.7			398.1			4.3			990.1
As of September 30, 2020	$	13,367.7		$	4,872.6		$	1,004.8		$	19,245.1		70	%	25	%	5	%	100	%
Market appreciation/(depreciation) & other (2) (3)																					Market appreciation/(depreciation) & other (2) (3)	701.1		449.8		1.9		1,152.8
As of March 31, 2021																					As of March 31, 2021	$	14,138.5	$	5,982.6	$	1,018.7	$	21,139.8	67	%	28	%	5	%	100	%
Average AUM for period	$	13,432.5		$	4,785.3		$	1,005.1		$	19,222.9										Average AUM for period	$	13,699.0	$	5,719.2	$	1,029.1	$	20,447.3

As of June 30, 2019	$	13,844.3		$	6,309.5		$	1,097.0		$	21,250.8		65	%	30	%	5	%	100	%
Gross client inflows ⁽¹⁾	433.8			107.1			62.8			603.7
Gross client outflows ⁽¹⁾	(1,116.7		)	(396.4		)	(123.9		)	(1,637.0		)
Market appreciation/(depreciation) & other ⁽²⁾	226.1			12.0			17.6			255.7
As of September 30, 2019	$	13,387.5		$	6,032.2		$	1,053.5		$	20,473.2		65	%	30	%	5	%	100	%
Average AUM for period	$	13,619.9		$	6,177.2		$	1,079.6		$	20,876.7

	Blended Asset			Equity			Fixed Income			Total			Blended Asset		Equity		Fixed Income		Total
				(in millions)
As of December 31, 2019	$	13,473.3		$	4,988.8		$	1,018.0		$	19,480.1		69	%	26	%	5	%	100	%	As of December 31, 2019	$	13,473.3	$	4,988.8	$	1,018.0	$	19,480.1	69	%	26	%	5	%	100	%
Gross client inflows (1)	1,256.0			440.8			119.2			1,816.0											Gross client inflows (1)	368.2		237.2		63.4		668.8
Gross client outflows (1)	(2,424.8		)	(715.6		)	(180.1		)	(3,320.5		)									Gross client outflows (1)	(816.4)		(231.7)		(81.1)		(1,129.2)
Market appreciation/(depreciation) & other ⁽²⁾	1,063.2			158.6			47.7			1,269.5											Market appreciation/(depreciation) & other (2)	(928.3)		(1,049.6)		18.7		(1,959.2)
As of September 30, 2020	$	13,367.7		$	4,872.6		$	1,004.8		$	19,245.1		69	%	26	%	5	%	100	%
As of March 31, 2020																					As of March 31, 2020	$	12,096.8	$	3,944.7	$	1,019.0	$	17,060.5	71	%	24	%	5	%	100	%
Average AUM for period	$	13,124.9		$	4,635.3		$	1,012.8		$	18,773.0										Average AUM for period	$	13,025.7	$	4,640.4	$	1,025.0	$	18,691.1

As of December 31, 2018	$	13,532.2		$	5,501.9		$	1,129.5		$	20,163.6		67	%	27	%	6	%	100	%
Gross client inflows ⁽¹⁾	1,062.9			648.1			163.8			1,874.8
Gross client outflows ⁽¹⁾	(2,928.3		)	(1,087.3		)	(317.1		)	(4,332.7		)
Market appreciation/(depreciation) & other ⁽²⁾	1,720.7			969.5			77.3			2,767.5
As of September 30, 2019	$	13,387.5		$	6,032.2		$	1,053.5		$	20,473.2		65	%	30	%	5	%	100	%
Average AUM for period	$	13,640.1		$	6,077.6		$	1,099.2		$	20,816.9

________________________


~~(1)~~	~~Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.~~


~~(2)~~	Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.

(1)Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.

(3)Beginning in March 2021, AUM includes assets associated with our model-delivery business, previously classified as assets under advisement. These assets totaled $429.9 million at December 31, 2020, comprised of $281.3 million in our blended asset portfolio and $148.6 million in our equity portfolio. These amounts are included above in market appreciation (depreciation) and other for the first quarter of 2021.

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The following table summarizes the annualized returns for several of our key investment strategies and relative benchmarks. Since inception and over long-term periods, we believe these strategies have earned attractive returns on both an absolute and relative basis. We recognize, however that some key strategies have mixed track records over the past several years. These strategies are used across separate account, mutual fund and collective investment trust vehicles, and represent approximately ~~76%~~77% of our AUM as of ~~September 30, 2020.~~March 31, 2021.


Key Strategies	AUM as of September 30, 2020 (in millions)		Inception Date	Annualized Returns as of September 30, 2020 (2)					Key Strategies	AUM as of March 31, 2021 (in millions)		Inception Date	Annualized Returns as of March 31, 2021 (2)
				One Year	Three Year	Five Year	Ten Year	Inception					One Year	Three Year	Five Year	Ten Year	Inception
Long-Term Growth (30%-80% Equity Exposure)	$	5,553.3	1/1/1973	14.7%	8.7%	9.1%	7.9%	9.5%	Long-Term Growth (30%-80% Equity Exposure)	$	5,946.9	1/1/1973	29.9%	11.9%	10.5%	8.0%	9.7%
Blended Index (3)				10.3%	7.6%	8.6%	7.8%	8.8%	Blended Index (3)				30.0%	10.3%	9.7%	8.0%	8.9%
Core Non-U.S. Equity	$	614.7	10/1/1996	18.5%	5.8%	8.8%	4.8%	7.5%	Core Non-U.S. Equity	$	754.0	10/1/1996	65.4%	11.8%	11.2%	5.7%	8.2%
Benchmark: ACWIxUS Index				3.0%	1.2%	6.2%	4.0%	4.8%	Benchmark: ACWIxUS Index				49.4%	6.5%	9.8%	4.9%	5.6%
Growth with Reduced Volatility (20%-60% Equity Exposure)	$	2,603.6	1/1/1973	13.1%	7.7%	7.5%	6.5%	8.7%	Growth with Reduced Volatility (20%-60% Equity Exposure)	$	2,827.3	1/1/1973	23.3%	10.2%	8.6%	6.6%	8.8%
Blended Index (4)				9.2%	6.8%	7.2%	6.6%	8.4%	Blended Index (4)				21.8%	8.8%	7.9%	6.7%	8.4%
Equity-Oriented (70%-100% Equity Exposure)	$	1,325.7	1/1/1993	17.6%	11.8%	12.4%	9.9%	10.2%	Equity-Oriented (70%-100% Equity Exposure)	$	1,438.3	1/1/1993	50.7%	15.7%	14.7%	10.2%	10.6%
Blended Benchmark: 65% Russell 3000 / 20% ACWIxUS/ 15% Bloomberg Barclays U.S. Aggregate Bond				11.7%	8.8%	10.9%	10.2%	8.6%	Blended Benchmark: 65% Russell 3000 / 20% ACWIxUS/ 15% Bloomberg Barclays U.S. Aggregate Bond				49.2%	13.3%	13.3%	10.6%	9.1%
Equity-Focused Blend (50%-90% Equity Exposure)	$	962.7	4/1/2000	16.0%	9.7%	10.2%	8.8%	7.4%	Equity-Focused Blend (50%-90% Equity Exposure)	$	1,057.4	4/1/2000	36.7%	13.5%	12.0%	9.0%	7.9%
Blended Benchmark: 53% Russell 3000 / 17% ACWIxUS/ 30% Bloomberg Barclays U.S. Aggregate Bond				11.1%	8.3%	9.8%	9.1%	5.8%	Blended Benchmark: 53% Russell 3000 / 17% ACWIxUS/ 30% Bloomberg Barclays U.S. Aggregate Bond				39.4%	11.9%	11.6%	9.4%	6.3%
Core Equity-Unrestricted (90%-100% Equity Exposure)	$	562.7	1/1/1995	17.5%	12.9%	13.8%	11.5%	11.3%	Core Equity-Unrestricted (90%-100% Equity Exposure)	$	669.3	1/1/1995	57.8%	16.9%	16.3%	11.6%	11.8%
Blended Benchmark: 80% Russell 3000 / 20% ACWIxUS				12.6%	9.5%	12.2%	11.6%	9.2%	Blended Benchmark: 80% Russell 3000 / 20% ACWIxUS				59.9%	15.0%	15.3%	12.0%	9.8%
Core U.S. Equity	$	175.6	7/1/2000	20.1%	15.2%	15.7%	12.6%	8.6%	Core U.S. Equity	$	284.8	7/1/2000	59.1%	19.1%	18.1%	12.8%	9.3%
Benchmark: Russell 3000				15.0%	11.7%	13.7%	13.5%	6.5%	Benchmark: Russell 3000				62.5%	17.1%	16.6%	13.8%	7.4%
Conservative Growth (5%-35% Equity Exposure)	$	516.8	4/1/1992	9.4%	5.8%	5.3%	4.5%	6.0%	Conservative Growth (5%-35% Equity Exposure)	$	569.0	4/1/1992	12.6%	7.0%	5.6%	4.5%	6.0%
Blended Benchmark: 15% Russell 3000 / 5% ACWIxUS / 80% Bloomberg Barclays U.S. Intermediate Aggregate Bond				7.4%	5.4%	5.1%	4.7%	6.2%	Blended Benchmark: 15% Russell 3000 / 5% ACWIxUS / 80% Bloomberg Barclays U.S. Intermediate Aggregate Bond				11.3%	6.5%	5.2%	4.7%	6.2%
Aggregate Fixed Income	$	189.5	1/1/1984	8.1%	5.5%	4.3%	3.6%	7.2%	Aggregate Fixed Income	$	196.7	1/1/1984	2.2%	5.1%	3.3%	3.4%	7.0%
Benchmark: Bloomberg Barclays U.S. Aggregate Bond				7.0%	5.2%	4.2%	3.6%	7.1%	Benchmark: Bloomberg Barclays U.S. Aggregate Bond				0.7%	4.7%	3.1%	3.4%	6.9%
Rainier International Small Cap	$	920.2	3/28/2012	32.1%	9.2%	10.9%	N/A ⁽¹⁾	13.0%	Rainier International Small Cap	$	1,088.0	3/28/2012	76.6%	11.9%	14.2%	N/A (1)	14.3%
Benchmark: MSCI ACWIxUS Small Cap Index				7.0%	0.9%	6.8%	N/A ⁽¹⁾	5.8%	Benchmark: MSCI ACWIxUS Small Cap Index				69.8%	6.6%	10.4%	N/A (1)	8.1%
Disciplined Value US (5)	$	1,133.1	1/1/2013	(2.8)%	5.6%	10.3%	N/A ⁽¹⁾	12.2%
Disciplined Value US									Disciplined Value US	$	1,435.4	1/1/2013	50.9%	11.2%	13.3%	N/A (1)	14.2%
Benchmark: Russell 1000 Value				(5.0)%	2.6%	7.7%	N/A ⁽¹⁾	11.4%	Benchmark: Russell 1000 Value				56.1%	11.0%	11.7%	N/A (1)	13.8%

__________________________


~~(1)~~	~~Performance not available given the product's inception date.~~


~~(2)~~	~~Key investment strategy returns are presented net of fees. Benchmark returns do not reflect any fees or expenses.~~

~~(3)~~

Benchmark shown uses the 55/45 Blended Index from 01/01/1973-12/31/1987 and the 40/15/45 Blended Index from 01/01/1988- 09/30/2020. The 55/45 Blended Index is represented by 55% S&P 500 Total Return Index ("S&P 500") and 45% Bloomberg Barclays U.S. Government/Credit Bond Index ("BGCB"). The 40/15/45 Blended Index is 40% Russell 3000 Index ("Russell 3000"), 15% MSCI ACWI ex USA Index ("ACWxUS"), and 45% Bloomberg Barclays U.S. Aggregate Bond Index ("BAB").

~~(4)~~

Benchmark shown uses the 40/60 Blended Index from 01/01/1973-12/31/1987, the 30/10/60 Blended Index from 01/01/1988-12/31/2019, and the 30/10/30/30 Blended Index from 01/01/2020 to 09/30/2020. The 40/60 Blended Index is represented by 40% S&P 500 and 60% BGCB. The 30/10/60 Blended Index is represented by 30% Russell 3000, 10% ACWxUS, and 60% BAB. The 30/10/30/30 Blended Index is represented by 30% Russell 3000, 10% ACWxUS, 30% BAB, and 30% Barclays Intermediate Aggregate Bond Index.


~~(5)~~	~~In our Annual Report, on Form 10-K for the year ended December 31, 2019, we began presenting the performance of Disciplined Value US in place of Disciplined Value Unrestricted.~~

(1)Performance not available given the product's inception date.

(2)Key investment strategy returns are presented net of fees. Benchmark returns do not reflect any fees or expenses.

(3)Benchmark shown uses the 55/45 Blended Index from 01/01/1973-12/31/1987 and the 40/15/45 Blended Index from 01/01/1988- 03/31/2021. The 55/45 Blended Index is represented by 55% S&P 500 Total Return Index ("S&P 500") and 45% Bloomberg Barclays U.S. Government/Credit Bond Index ("BGCB"). The 40/15/45 Blended Index is 40% Russell 3000 Index ("Russell 3000"), 15% MSCI ACWI ex USA Index ("ACWxUS"), and 45% Bloomberg Barclays U.S. Aggregate Bond Index ("BAB").

(4)Benchmark shown uses the 40/60 Blended Index from 01/01/1973-12/31/1987, the 30/10/60 Blended Index from 01/01/1988-12/31/2019, and the 30/10/30/30 Blended Index from 01/01/2020 to 03/31/2021. The 40/60 Blended Index is represented by 40% S&P 500 and 60% BGCB. The 30/10/60 Blended Index is represented by 30% Russell 3000, 10% ACWxUS, and 60% BAB. The 30/10/30/30 Blended Index is represented by 30% Russell 3000, 10% ACWxUS, 30% BAB, and 30% Barclays Intermediate Aggregate Bond Index.

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Revenue

Our revenues primarily consist of investment management fees earned from managing our clients’ AUM. We earn our investment management fees as a percentage of our clients’ AUM either as of a specified date or on a daily basis. Our investment management fees can fluctuate based on the average fee rate for our investment management products, which are affected by the composition of our AUM among various portfolios and investment vehicles.

We serve as the investment adviser for Manning & Napier Fund, Inc., Exeter Trust Company Collective Investment Trusts and Rainier Multiple Investment Trust. The mutual funds are open-end mutual funds that primarily offer no-load share classes designed to meet the needs of a range of institutional and other investors. Exeter Trust Company, an affiliated New Hampshire-chartered trust company and Rainier Multiple Investment Trust sponsor collective investment trusts for qualified retirement plans, including 401(k) plans. These mutual funds and collective investment trusts comprised ~~$5.6~~$5.7 billion, or ~~29%~~27%, of our AUM as of ~~September 30, 2020.~~March 31, 2021. MNA and Rainier also serve as the investment advisor to all of our separately managed accounts, managing ~~$13.6~~$15.5 billion, or ~~71%~~73%, of our AUM as of ~~September 30, 2020,~~March 31, 2021, including assets managed as a sub-advisor to pooled investment vehicles. For the period ended ~~September 30, 2020~~March 31, 2021 approximately 98% of our revenue was earned from clients located in the United States.

We earn distribution and servicing fees for providing services to our affiliated mutual funds. Revenue is computed and earned daily based on a percentage of AUM.

We earn custodial service fees for administrative and safeguarding services performed by Exeter Trust Company. Fees are calculated as a percentage of the client's market value with additional fees for certain transactions.

During the first quarter of 2019, we completed the effort to restructure fees for many of our mutual fund and collective trust vehicles. The impacts on our overall revenue margins and operating expenses are described below in the discussion of results for the three and nine months ended September 30, 2020.

Operating Expenses

Our largest operating expenses are employee compensation and related costs, and to a lesser degree, distribution, servicing and custody expenses, discussed further below, with a significant portion of these expenses varying in a direct relationship to our absolute and relative investment management performance, as well as AUM and revenues. We review our operating expenses in relation to the investment market environment and changes in our revenues. However, we are generally willing to make expenditures as necessary, even when faced with declining rates of growth in revenues, in order to support our investment products, our client service levels, strategic initiatives and our long-term value.

•Compensation and related costs. Employee compensation and related costs represent our largest expense, including employee salaries and benefits, incentive compensation to investment and sales professionals, compensation issued under our long-term incentive plan as well as equity compensation. These costs are affected by changes in the employee headcount, the mix of existing job descriptions, competitive factors, the addition of new skill sets and variations in the level of our AUM and revenues. In addition, these costs are impacted by the amount of compensation granted under our equity plan and the amount of deferred cash awards granted under our long-term incentive plan. Incentive compensation for our research team considers the cumulative impact of both absolute and relative investment performance over historical time periods, with more weight placed on the recent periods. As such, incentive compensation paid to our research team will vary, in part, based on absolute and relative investment performance.

•Distribution, servicing and custody expenses. Distribution, servicing and custody expenses represent amounts paid to various intermediaries for distribution, shareholder servicing, administrative servicing and custodial services. These expenses generally increase or decrease in line with changes in our mutual fund and collective investment trust AUM or services performed by these intermediaries. During the first quarter of 2019, we completed the effort, begun in 2017, of restructuring fees across our mutual funds. The financial impacts were a reduction in the management fees on existing business, as well as an offsetting reduction in related distribution, servicing and custody expenses. Given the overall pressure on fees that all active managers are facing, we felt bringing our fund fees to a more competitive level would enhance our ability to attract additional assets in the future.

•Other operating costs. Other operating costs include technology costs, accounting, legal and other professional service fees, occupancy and facility costs, travel and entertainment expenses, insurance, market data service expenses and all other miscellaneous costs associated with managing the day-to-day operations of our business.

Non-Operating Income (Loss)

Non-operating income (loss) includes interest expense, interest and dividend income, changes in liability under the tax receivable agreement ("TRA") entered into between Manning & Napier and the other holders of Class A units of Manning &

Napier Group, LLC ("Manning & Napier Group"), gains (losses) related to investment securities sales as well as changes in values of those investment securities designated as equity securities, at fair value.

We expect the interest and investment components of non-operating income (loss) to fluctuate based on market conditions, the performance of our investments and the overall amount of our investments held by the Company to provide initial cash seeding for product development purposes and short-term investment for cash management opportunities.

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Provision for Income Taxes

The Company is comprised of entities that have elected to be treated as either a limited liability company ("LLC") or a "C-Corporation". As such, the entities functioning as LLCs are not liable for or able to benefit from U.S. federal or most state and local income taxes on their earnings, and their earnings (losses) will be included in the personal income tax returns of each entity's unit holders. The entities functioning as C-Corporations are liable for or able to benefit from U.S. federal and state and local income taxes on their earnings and losses, respectively.

Noncontrolling Interests

Manning & Napier, Inc. holds an economic interest of approximately ~~88.2%~~88.9% in Manning & Napier Group as of ~~September 30, 2020~~March 31, 2021 and, as managing member, controls all of the business and affairs of Manning & Napier Group. As a result, the Company consolidates the financial results of Manning & Napier Group and records a noncontrolling interest in our consolidated financial statements. Net income attributable to noncontrolling interests on the consolidated statements of operations represents the portion of earnings attributable to the economic interest in Manning & Napier Group held by the noncontrolling interests.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~.2020.

This management’s discussion and analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 together with the consolidated financial statements and related notes and the other financial information that appear elsewhere in this report.

Recent Accounting Pronouncements

See Note 2, "Summary of Significant Accounting Policies - Recent Accounting Pronouncements" to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.

~~Revision~~

Table of ~~Previously Reported Consolidated Statements of Operations~~Contents

In the quarter ended September 30, 2020, we revised our sales channel classification of certain 2020 and 2019 investment management revenues to properly present these revenues as either wealth management or institutional and intermediary investment management revenues. The reclassification had no impact on total revenue, operating income, or net income. See Note 2, “Summary of Significant Accounting Policies - Revision of Previously Reported Consolidated Statements of Operations” to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~September 30, 2019~~March 31, 2020

Assets Under Management

The following table reflects changes in our AUM for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019~~:2020:


	Three months ended September 30,						Period-to-Period						Three months ended March 31,				Period-to-Period
	2020			2019			$			%			2021		2020		$		%
	(in millions)												(in millions)
Wealth Management ⁽⁴⁾												Wealth Management (4)
Beginning assets under management	$	8,334.4		$	9,397.9		$	(1,063.5	)	(11	)%	Beginning assets under management	$	8,906.4	$	8,716.4	$	190.0	2	%
Gross client inflows ⁽¹⁾	250.7			231.6			19.1			8	%	Gross client inflows (1)	224.8		202.1		22.7		11	%
Gross client outflows ⁽¹⁾	(304.9		)	(664.7		)	359.8			(54	)%	Gross client outflows (1)	(305.3)		(375.3)		70.0		(19)	%
AUM Reclassification ⁽³⁾	(266.8		)	—			(266.8		)	NM
Market appreciation (depreciation) & other ⁽²⁾	89.2			(589.9		)	679.1			(115	)%

Market appreciation (depreciation) & other (2)(3)												Market appreciation (depreciation) & other (2)(3)	391.6		(810.3)		1,201.9		(148)	%
Ending assets under management	$	8,102.6		$	8,374.9		$	(272.3	)	(3	)%	Ending assets under management	$	9,217.5	$	7,732.9	$	1,484.6	19	%
Average AUM for period	$	8,093.3		$	8,559.4							Average AUM for period	$	8,993.0	$	8,527.9
Institutional and Intermediary ⁽⁴⁾												Institutional and Intermediary (4)
Beginning assets under management	$	10,305.9		$	11,852.9		$	(1,547.0	)	(13	)%	Beginning assets under management	$	11,213.0	$	10,763.7	$	449.3	4	%
Gross client inflows ⁽¹⁾	343.7			372.1			(28.4		)	(8	)%	Gross client inflows (1)	401.6		466.7		(65.1)		(14)	%
Gross client outflows ⁽¹⁾	(674.8		)	(972.3		)	297.5			(31	)%	Gross client outflows (1)	(453.5)		(753.9)		300.4		(40)	%
AUM Reclassification ⁽³⁾	266.8			—			266.8			NM
Market appreciation (depreciation) & other ⁽²⁾	900.9			845.6			55.3			7	%

Market appreciation (depreciation) & other (2)(3)												Market appreciation (depreciation) & other (2)(3)	761.2		(1,148.9)		1,910.1		(166)	%
Ending assets under management	$	11,142.5		$	12,098.3		$	(955.8	)	(8	)%	Ending assets under management	$	11,922.3	$	9,327.6	$	2,594.7	28	%
Average AUM for period	$	11,129.6		$	12,317.3							Average AUM for period	$	11,454.3	$	10,136.2
Total assets under management												Total assets under management
Beginning assets under management	$	18,640.3		$	21,250.8		$	(2,610.5	)	(12	)%	Beginning assets under management	$	20,119.4	$	19,480.1	$	639.3	3	%
Gross client inflows ⁽¹⁾	594.4			603.7			(9.3		)	(2	)%	Gross client inflows (1)	626.4		668.8		(42.4)		(6)	%
Gross client outflows ⁽¹⁾	(979.7		)	(1,637.0		)	657.3			(40	)%	Gross client outflows (1)	(758.8)		(1,129.2)		370.4		(33)	%
Market appreciation (depreciation) & other ⁽²⁾	990.1			255.7			734.4			287	%

Market appreciation (depreciation) & other (2)(3)												Market appreciation (depreciation) & other (2)(3)	1,152.8		(1,959.2)		3,112.0		(159)	%
Ending assets under management	$	19,245.1		$	20,473.2		$	(1,228.1	)	(6	)%	Ending assets under management	$	21,139.8	$	17,060.5	$	4,079.3	24	%
Average AUM for period	$	19,222.9		$	20,876.7							Average AUM for period	$	20,447.3	$	18,691.1

________________________

~~NM - Percentage change~~(1)Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.

(4)AUM and gross client flows between sales channels have been estimated based upon preliminary data. For a limited portion of our mutual fund AUM, reporting by sales channel is not ~~meaningful~~available at the time of this report. Such estimates have no impact on total AUM, total cash flows, or AUM by investment portfolio reported in the table above.


~~(1)~~	~~Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.~~


~~(2)~~	Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.


~~(3)~~	During the third quarter of 2020, the Company identified certain Institutional and Intermediary assets that were incorrectly allocated to the Wealth Management Sales Channel as of June 30, 2020. The difference had no impact to total AUM or AUM by Portfolio as of June 30, 2020 and were reclassified to the appropriate Sales Channel during the third quarter of 2020.


~~(4)~~	AUM and gross client flows between sales channels have been estimated based upon preliminary data. For a limited portion of our mutual fund AUM, reporting by sales channel is not available at the time of this report. Such estimates have no impact on total AUM, total cash flows, or AUM by investment portfolio reported in the table above.

Our total AUM ~~decreased~~increased by ~~$1.2~~$4.1 billion from ~~$20.5~~$17.1 billion at ~~September 30, 2019~~March 31, 2020 to ~~$19.2~~$21.1 billion at ~~September 30, 2020.~~March 31, 2021. The ~~decrease~~increase was attributable to market appreciation of $6.1 billion, including the addition of approximately $0.4 billion in model-delivery assets that were previously classified as assets under advisement, and partially offset by net client outflows of ~~$3.5 billion, partially offset by market appreciation of $2.3~~$2.0 billion. Net client outflows consisted of approximately ~~$0.8~~$0.4 billion of net outflows for wealth management and ~~$2.7~~$1.5 billion for institutional and intermediary. By portfolio, the rates of change in AUM from ~~September 30, 2019~~March 31, 2020 to ~~September 30, 2020~~March 31, 2021 consisted of a ~~$1.2~~$2.0 billion, or ~~19% decrease~~52% increase in our equity portfolio, a ~~$19.8 million,~~$2.0 billion, or ~~0.1% decrease~~17% increase in our blended asset portfolio, and ~~a decrease~~an increase of approximately ~~$48.7~~$0.3 million, or 5%0.03% in our fixed income portfolio.

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We have experienced a decrease in the overall rate of outflows with gross outflows of approximately ~~$1.0~~$0.8 billion during the quarter ended ~~September 30, 2020,~~March 31, 2021, a ~~40%~~33% decrease from the quarter ended ~~September 30, 2019.~~March 31, 2020. Gross outflows annualized as a percentage of our AUM, or turnover rate, for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~12%~~15%.

The rate of gross client inflows was approximately $0.6 billion during the three months ended ~~September 30, 2020, consistent with~~March 31, 2021, a 6% decrease from the quarter ended ~~September 30, 2019.~~March 31, 2020. We believe that by demonstrating stability in client AUM and in our organization, and modernizing our platform, we will provide a foundation from which we can grow.

The total AUM increase of approximately ~~$0.6~~$1.0 billion, to ~~$19.2~~$21.1 billion at ~~September 30, 2020~~March 31, 2021 from ~~$18.6~~$20.1 billion at ~~June 30,~~December 31, 2020 was attributable to market appreciation of ~~$1.0~~$1.2 billion, partially offset by net client outflows of ~~$0.4~~approximately $0.1 billion. Net client outflows consisted of ~~less than $0.1 billion~~$80.5 million for wealth management while net client outflows in institutional and intermediary were ~~$0.3 billion.~~$51.9 million. The blended investment gain was ~~1.1%~~4.4% in wealth management accounts and ~~8.7%~~6.8% in institutional and intermediary. By portfolio in the period, our AUM increased by ~~$0.3~~$0.6 billion in our blended asset portfolio, ~~$0.3~~$0.4 billion in our equity portfolio, and ~~increased by $1.5~~$3.4 million in our fixed income portfolio.

As of ~~September 30, 2020,~~March 31, 2021, the composition of our AUM was ~~42%~~44% in wealth management and ~~58%~~56% in institutional and intermediary, compared to ~~41%~~45% in wealth management and ~~59%~~55% in institutional and intermediary at ~~September 30, 2019.~~March 31, 2020. The composition of our AUM across portfolios at ~~September 30, 2020~~March 31, 2021 was ~~70%~~67% in blended assets, ~~25%~~28% in equity, and 5% in fixed income, compared to ~~65%~~71% in blended assets, ~~30%~~24% in equity, 5% in fixed income at ~~September 30, 2019.~~March 31, 2020.

For our wealth management channel, gross client inflows of less than ~~$0.3~~$0.2 billion were offset by $0.3 billion of gross client outflows during the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~$0.3~~approximately $0.2 billion gross client inflows include approximately $0.2 billion into our blended asset portfolio and less than $0.1 billion into both our equity and fixed income portfolios. Outflows during the quarter were $0.3 billion, or ~~86%~~87% from blended portfolios, less than $0.1 billion, or ~~12%~~8% from equity, and less than $0.1 billion, or 2%5% from fixed income portfolios, respectively.

Gross client inflows of ~~$0.3~~$0.4 billion were offset by gross client outflows of ~~$0.7~~$0.5 billion within our institutional and intermediary channel during the three months ended ~~September 30, 2020.~~March 31, 2021. Gross client inflows include approximately $0.2 billion into our blended asset portfolios, $0.2 billion into our equity portfolios, and less than $0.1 billion into ~~both~~ our ~~equity and~~ fixed income portfolios. With regard to gross client outflows, ~~$0.5~~$0.2 billion, or ~~73%~~52% was from our blended asset portfolios, ~~$0.2~~$0.1 billion or ~~23%~~39% was from our equity portfolios, and less than $0.1 billion, or 4%9% was from our fixed income portfolios.

Table of Contents

The following table sets forth our results of operations and related data for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


	Three months ended September 30,				Period-to-Period						Three months ended March 31,				Period-to-Period
	2020		2019		$			%			2021		2020		$		%
	(in thousands, except share data)										(in thousands, except share data)
Revenues										Revenues
Management Fees										Management Fees
Wealth management	$	13,743	$	14,181	$	(438	)	(3	)%	Wealth management	$	15,348	$	14,020	$	1,328	9	%
Institutional and intermediary	13,534		14,815		(1,281		)	(9	)%	Institutional and intermediary	14,328		12,411		1,917		15	%
Distribution and shareholder servicing	2,424		2,570		(146		)	(6	)%	Distribution and shareholder servicing	2,153		2,390		(237)		(10)	%
Custodial services	1,577		1,763		(186		)	(11	)%	Custodial services	1,645		1,599		46		3	%
Other revenue	789		849		(60		)	(7	)%	Other revenue	677		689		(12)		(2)	%
Total revenue	32,067		34,178		(2,111		)	(6	)%	Total revenue	34,151		31,109		3,042		10	%
Expenses										Expenses
Compensation and related costs	18,605		19,504		(899		)	(5	)%	Compensation and related costs	18,874		19,263		(389)		(2)	%
Distribution, servicing and custody expenses	2,596		2,959		(363		)	(12	)%	Distribution, servicing and custody expenses	2,358		2,813		(455)		(16)	%
Other operating costs	6,611		8,286		(1,675		)	(20	)%	Other operating costs	6,710		7,097		(387)		(5)	%
Total operating expenses	27,812		30,749		(2,937		)	(10	)%	Total operating expenses	27,942		29,173		(1,231)		(4)	%
Operating income	4,255		3,429		826			24	%	Operating income	6,209		1,936		4,273		221	%
Non-operating income (loss)										Non-operating income (loss)
Non-operating income (loss), net	550		3,298		(2,748		)	(83	)%	Non-operating income (loss), net	458		(4,327)		4,785		(111)	%
Income before provision for income taxes	4,805		6,727		(1,922		)	(29	)%
Provision for income taxes	1,738		150		1,588			1,059	%
Income before provision for (benefit from) income taxes										Income before provision for (benefit from) income taxes	6,667		(2,391)		9,058		(379)	%
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	703		(3,226)		3,929		(122)	%
Net income attributable to controlling and noncontrolling interests	3,067		6,577		(3,510		)	(53	)%	Net income attributable to controlling and noncontrolling interests	5,964		835		5,129		614	%
Less: net income attributable to noncontrolling interests	560		5,753		(5,193		)	(90	)%
Less: net income (loss) attributable to noncontrolling interests										Less: net income (loss) attributable to noncontrolling interests	724		(23)		747		(3,248)	%
Net income attributable to Manning & Napier, Inc.	$	2,507	$	824	$	1,683		204	%	Net income attributable to Manning & Napier, Inc.	$	5,240	$	858	$	4,382	511	%
Per Share Data										Per Share Data
Net income per share available to Class A common stock										Net income per share available to Class A common stock
Basic	$	0.15	$	0.05						Basic	$	0.31	$	0.05
Diluted	$	0.13	$	0.05						Diluted	$	0.26	$	0.01
Weighted average shares of Class A common stock outstanding										Weighted average shares of Class A common stock outstanding
Basic	16,176,280		15,290,595							Basic	17,026,500		15,812,951
Diluted	18,928,954		15,600,686							Diluted	20,273,343		77,907,557

Other financial and operating data										Other financial and operating data
Economic income ⁽¹⁾	$	5,219	$	5,177	$	42		1	%
Economic income (loss) (1)										Economic income (loss) (1)	$	7,569	$	(1,672)	$	9,241	(553)	%
Economic net income ⁽¹⁾	$	3,170	$	3,676	$	(506	)	(14	)%	Economic net income (1)	$	6,700	$	1,566	$	5,134	328	%
Economic net income per adjusted share ⁽¹⁾	$	0.14	$	0.05						Economic net income per adjusted share (1)	$	0.29	$	0.02
Weighted average adjusted Class A common stock outstanding⁽¹⁾	22,395,521		79,033,403							Weighted average adjusted Class A common stock outstanding(1)	23,399,391		80,759,644

_______________________

~~(1)~~

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Supplemental Non-GAAP Financial Information” for Manning & Napier’s reasons for including these measures not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP") in this report in addition to a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated.

(1)See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Supplemental Non-GAAP Financial Information” for Manning & Napier’s reasons for including these measures not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP") in this report in addition to a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated.

Table of Contents

Revenues

Wealth management revenue ~~decreased~~increased by ~~$0.4~~$1.3 million, or 3%9%, to ~~$13.7~~$15.3 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$14.2~~$14.0 million for the three months ended ~~September 30, 2019.~~March 31, 2020. This ~~decrease~~increase is driven primarily by a 5%, or $0.5 billion, ~~decrease~~increase in our average wealth management AUM for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the three months ended ~~September 30, 2019.~~March 31, 2020. At ~~September 30, 2020~~March 31, 2021 the concentration of investments in our wealth management assets were ~~91%~~87% blended assets, 6%10% equity and 3% fixed income, compared to ~~79%~~84% blended assets, ~~18%~~12% equity and 3%4% fixed income as of ~~September 30, 2019.~~March 31, 2020.

Institutional and intermediary revenue ~~decreased~~increased by ~~$1.3~~$1.9 million, or 9%15%, to ~~$13.5~~$14.3 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$14.8~~$12.4 million for the three months ended ~~September 30, 2019.~~March 31, 2020. This ~~decrease~~increase is driven primarily by a ~~10%~~13%, or ~~$1.2~~$1.3 billion, ~~decrease~~increase in our average institutional and intermediary AUM for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the three months ended ~~September 30, 2019.~~March 31, 2020. As of ~~September 30, 2020,~~March 31, 2021, the concentration of assets in our institutional and intermediary was ~~54%~~52% blended assets, ~~39% equity and 7% fixed income, compared to 56% blended assets, 38%~~42% equity and 6% fixed income, compared to 60% blended assets, 32% equity and 8% fixed income as of ~~September 30, 2019.~~March 31, 2020.

Distribution and shareholder servicing revenue decreased by ~~$0.1~~$0.2 million, or 6%10%, to $2.2 million for the three months ended March 31, 2021 from $2.4 million for the three months ended ~~September 30, 2020 from $2.6 million for the three months ended September 30, 2019.~~March 31, 2020. This decrease was driven by a ~~reduction~~change in business mix within our mutual ~~fund and collective investment trust average AUM of 8% for the same period.~~funds.

Custodial services revenue ~~decreased by $0.2 million, or 11%, to~~remained consistent at $1.6 million for the three months ended ~~September 30, 2020 from $1.8 million for~~March 31, 2021 as compared to the three months ended ~~September 30, 2019. The decrease primarily relates to decreases~~March 31, 2020, in line with our collective investment trust ~~AUM.~~AUM for each period.

Operating Expenses

Our operating expenses decreased by ~~$2.9~~$1.2 million, or ~~10%~~4%, to ~~$27.8~~$27.9 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$30.7~~$29.2 million for the three months ended ~~September 30, 2019.~~March 31, 2020.

Compensation and related costs decreased by ~~$0.9~~$0.4 million, or 5%2%, to ~~$18.6~~$18.9 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$19.5~~$19.3 million for the three months ended ~~September 30, 2019.~~March 31, 2020. This decrease in the current quarter compared to the ~~third~~first quarter of ~~2019~~2020 was driven by a decrease in our workforce, ~~and~~coupled with the impacts of the implementation of a ~~reduction in employee severance costs, partially offset by an increase in~~deferred compensation plan during the ~~estimated~~three months ended March 31, 2021, whereby a fraction of incentive compensation for our most highly compensated employees will be invested in our investment ~~team resulting from investment performance.~~products and vested over a multi-year period. When considered as a percentage of revenue, compensation and related costs was ~~58%~~55% for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~57%~~62% for the three months ended ~~September 30, 2019. Given the declines in our revenue, we anticipate that our compensation ratio as a percentage of revenue will remain elevated in the near term compared to prior periods.~~March 31, 2020.

Distribution, servicing and custody expenses decreased by ~~$0.4~~$0.5 million, or ~~12%~~16%, to ~~$2.6~~$2.4 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~$3.0~~$2.8 million for the three months ended ~~September 30, 2019.~~March 31, 2020. The decrease resulted primarily from the Target Date Mutual Fund merger that was ~~generally driven by a 8% reduction~~completed during the third quarter of 2020 as well as changes in ~~mutual fund and collective investment trust average AUM for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.~~our business mix. As a percentage of mutual fund and collective investment trust average AUM, distribution, servicing and custody expense was ~~0.18%~~0.17% for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~0.19%~~0.20% for the three months ended ~~September 30, 2019.~~March 31, 2020.

Other operating costs for the three months ended ~~September 30, 2020~~March 31, 2021 were ~~$6.6~~$6.7 million, as compared to ~~$8.3~~$7.1 million for the three months ended September 30, 2019. We recognized a $1.2 million gain, which offset other operating costs, in the third quarter of 2020 related to the reimbursement of prior expenses paid on behalf of our affiliated mutual funds and collective investment trusts ("the Funds and CITs") upon the settlement of the Funds and CITs claim against a third party. As a percentage of revenue, other operating costs were 21% for the three months ended September 30, 2020 and 24% for the three months ended September 30, 2019.

~~Non-Operating Income (Loss)~~

Non-operating income for the three months ended September 30, 2020 was $0.6 million, a decrease of $2.7 million, from non-operating income of $3.3 million for the three months ended September 30, 2019. The following table reflects the components of non-operating income (loss) for the three months ended September 30, 2020 and 2019:

Three months ended September 30, Period-to-Period
2020 2019 $ %
(in thousands)
Non-operating income (loss)
Interest expense $ —
$ (13 ) $ 13
(100 )%
Interest and dividend income ⁽¹⁾
115
782
(667 ) (85 )%
Change in liability under tax receivable agreement ⁽²⁾
24
(394 ) 418
(106 )%
Net gains (losses) on investments ⁽³⁾
411
40
371
928 %
Gain on sale of business ⁽⁴⁾
—
2,883
(2,883 ) (100 )%
Total non-operating income (loss) $ 550
$ 3,298
$ (2,748 ) (83 )%

~~__________________________~~


~~(1)~~	The decrease in interest and dividend income for the three months ended September 30, 2020 compared to 2019 is attributable to a decrease in investments, including U.S. Treasury notes and bills, corporate bonds and other short-term investments to optimize cash management opportunities, coupled with a decrease in interest rates.


~~(2)~~	The change in the liability under the tax receivable agreement for both the three month periods ended September 30, 2020 and 2019 was driven by a change in our effective tax rate during the period and the corresponding increase in the payment of expected tax benefit under the tax receivable agreement.


~~(3)~~	The amount of net gain (loss) on investments held by us, to provide initial cash seeding for product development purposes and to hedge economic exposure to market movements on our deferred compensation plan, will vary depending on the performance and overall amount of our investments.


~~(4)~~	~~The gain on sale of business during the three months ended September 30, 2019 is due to the completion of the sale of our wholly-owned subsidiary Perspective Partners, LLC on August 30, 2019.~~

~~Provision for Income Taxes~~

Our provision for income taxes was $1.7 million for the three months ended September 30, 2020, compared to a provision of $0.2 million for the three months ended September 30, 2019. The increase in the provision for income taxes during the current quarter compared to the third quarter of 2019 is due to the redemption and subsequent retirement of Class A units of Manning & Napier Group during the second quarter of 2020. The redemption resulted in an increase of Manning & Napier, Inc.'s ownership of Manning & Napier Group from 19.5% to 88.2%. Accordingly, a higher portion of Manning & Napier Group's earnings are subject to taxation at the C-Corporation level.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

~~Assets Under Management~~

~~The following table reflects changes in our AUM for the nine months ended September 30, 2020 and 2019:~~

Nine months ended September 30, Period-to-Period
2020 2019 $ %
(in millions)
Wealth Management ⁽³⁾

Beginning assets under management $ 8,716.4
$ 8,700.9
$ 15.5
— %
Gross client inflows ⁽¹⁾
646.1
621.7
24.4
4 %
Gross client outflows ⁽¹⁾
(1,040.9 ) (1,550.7 ) 509.8
(33 )%
Market appreciation (depreciation) & other ⁽²⁾
(219.0 ) 603.0
(822.0 ) (136 )%
Ending assets under management $ 8,102.6
$ 8,374.9
$ (272.3 ) (3 )%
Average AUM for period $ 7,903.8
$ 8,515.5

Institutional and Intermediary ⁽³⁾

Beginning assets under management $ 10,763.7
$ 11,462.7
$ (699.0 ) (6 )%
Gross client inflows ⁽¹⁾
1,169.9
1,253.1
(83.2 ) (7 )%
Gross client outflows ⁽¹⁾
(2,279.6 ) (2,782.0 ) 502.4
(18 )%
Market appreciation (depreciation) & other ⁽²⁾
1,488.5
2,164.5
(676.0 ) (31 )%
Ending assets under management $ 11,142.5
$ 12,098.3
$ (955.8 ) (8 )%
Average AUM for period $ 10,869.2
$ 12,301.4

Total assets under management
Beginning assets under management $ 19,480.1
$ 20,163.6
$ (683.5 ) (3 )%
Gross client inflows ⁽¹⁾
1,816.0
1,874.8
(58.8 ) (3 )%
Gross client outflows ⁽¹⁾
(3,320.5 ) (4,332.7 ) 1,012.2
(23 )%
Market appreciation (depreciation) & other ⁽²⁾
1,269.5
2,767.5
(1,498.0 ) (54 )%
Ending assets under management $ 19,245.1
$ 20,473.2
$ (1,228.1 ) (6 )%
Average AUM for period $ 18,773.0
$ 20,816.9

~~________________________~~


~~(1)~~	~~Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.~~


~~(2)~~	Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.


~~(3)~~	AUM and gross client flows between sales channels have been estimated based upon preliminary data. For a limited portion of our mutual fund AUM, reporting by sales channel is not available at the time of this report. Such estimates have no impact on total AUM, total cash flows, or AUM by investment portfolio reported in the table above.

~~Our total AUM decreased by $1.2 billion from $20.5 billion at September 30, 2019 to $19.2 billion at September 30,~~March 31, 2020. The decrease was attributable to net client outflows of $3.5 billion, partially offset by market appreciation of $2.3 billion. Net client outflows consisted of approximately $0.8 billion of net outflows for wealth management and $2.7 billion for institutional and intermediary. By portfolio, the rates of change in AUM from September 30, 2019 to September 30, 2020 consisted of a $1.2 billion, or 19% decrease in our equity portfolio, a $19.8 million, or 0.1% decrease in our blended asset portfolio, and a decrease of $48.7 million, or 5% in our fixed income portfolio.

We have experienced a decrease in the overall rate of outflows with gross outflows of approximately $3.3 billion during the nine months ended September 30, 2020, a 23% improvement from the same period through September 30, 2019. While we have experienced an improvement in the rate of outflows, gross client inflows were approximately $1.8 billion during the nine months ended September 30, 2020, a 3% decrease compared to the same period in 2019. We believe that changes in our organization and macro trends towards passive investing have all played a role in this trend. We believe that by demonstrating

~~stability in client AUM and in our organization, along with continuing to improve long-term track records and modernizing our platform, we will provide a foundation from which we can grow.~~

The total AUM decrease of $0.2 billion, or 1%, to $19.2 billion at September 30, 2020 from $19.5 billion at December 31, 2019 was attributable to net client cash outflows of $1.5 billion, partially offset by market appreciation of $1.3 billion. Included in net client flows during the nine months ended September 30, 2020 were net client outflows in wealth management of approximately $0.4 billion and institutional and intermediary of approximately $1.1 billion. The blended investment loss was 2.5% in wealth management and the blended investment gain was 13.8% in institutional and intermediary. By portfolio, our $0.2 billion AUM decrease was derived from decreases of $116.2 million, or 2%, in our equity portfolio, $105.6 million, or 1%, in our blended asset portfolio and $13.2 million, or 1%, in our fixed income portfolio.

As of September 30, 2020, the composition of our AUM was 42% in wealth management and 58% in institutional and intermediary, compared to 41% in wealth management and 59% in institutional and intermediary at September 30, 2019. The composition of our AUM across portfolios at September 30, 2020 was 70% in blended assets, 25% in equity, and 5% in fixed income, compared to 65% in blended assets, 30% in equity, and 5% in fixed income as of September 30, 2019.

With regard to our wealth management channel, gross client inflows of $0.6 billion were offset by approximately $1.0 billion of gross client outflows during the nine months ended September 30, 2020. The $0.6 billion of gross client inflows included $0.5 billion into our blended asset portfolios, and less than $0.1 billion into both our equity portfolios and fixed income portfolios. Outflows during the nine months ended September 30, 2020 were $1.0 billion, with 71% from blended portfolios, 19% from equity, and 10% from fixed income portfolios, respectively. The annualized separate account retention rate was 95% for the nine months ended September 30, 2020, up from 87% for the rolling twelve months ended September 30, 2020. We believe the improvement is further support that our overall servicing efforts, importantly including our value-added advisory services, are effective in supporting long-term relationships.

Net client outflows of $1.1 billion from our institutional and intermediary channel included gross client inflows of $1.2 billion offset by gross client outflows of $2.3 billion during the nine months ended September 30, 2020. Gross client inflows into our blended asset portfolios, represented $0.7 billion, or 61%, of institutional and intermediary gross client inflows during the nine months ended September 30, 2020~~. With regard to gross client outflows, $1.7 billion, or 74%, of institutional and intermediary gross client outflows were from blended asset institutional and intermediary products.~~

~~The following table sets forth our results of operations and other data for the nine months ended September 30, 2020 and 2019:~~

Nine months ended September 30, Period-to-Period
2020 2019 $ %
(in thousands, except share data)
Revenues
Management Fees
Wealth management $ 41,335
$ 42,913
$ (1,578 ) (4 )%
Institutional and intermediary 38,255
44,927
(6,672 ) (15 )%
Distribution and shareholder servicing 7,117
7,760
(643 ) (8 )%
Custodial services 4,639
5,258
(619 ) (12 )%
Other revenue 2,176
2,411
(235 ) (10 )%
Total revenue 93,522
103,269
(9,747 ) (9 )%
Expenses
Compensation and related costs 55,247
61,113
(5,866 ) (10 )%
Distribution, servicing and custody expenses 7,834
9,736
(1,902 ) (20 )%
Other operating costs 21,197
25,232
(4,035 ) (16 )%
Total operating expenses 84,278
96,081
(11,803 ) (12 )%
Operating income 9,244
7,188
2,056
29 %
Non-operating income (loss)
Non-operating income (loss), net (1,087 ) 6,248
(7,335 ) (117 )%
Income before provision for income taxes 8,157
13,436
(5,279 ) (39 )%
Provision for (benefit from) income taxes (28 ) 723
(751 ) (104 )%
Net income attributable to controlling and noncontrolling interests 8,185
12,713
(4,528 ) (36 )%
Less: net income attributable to noncontrolling interests 3,274
10,914
(7,640 ) (70 )%
Net income attributable to Manning & Napier, Inc. $ 4,911
$ 1,799
$ 3,112
173 %
Per Share Data
Net income per share available to Class A common stock
Basic $ 0.30
$ 0.12

Diluted $ 0.15
$ 0.12

Weighted average shares of Class A common stock outstanding
Basic 16,041,128
15,163,205

Diluted 48,339,759
15,466,339

Other financial and operating data
Economic income ⁽¹⁾
$ 10,248
$ 13,220
$ (2,972 ) (22 )%
Economic net income ⁽¹⁾
$ 8,707
$ 9,386
$ (679 ) (7 )%
Economic net income per adjusted share ⁽¹⁾
$ 0.17
$ 0.12

Weighted average adjusted Class A common stock outstanding ⁽¹⁾
50,460,114
79,553,585

~~________________________~~


~~(1)~~	See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Supplemental Non-GAAP Financial Information” for Manning & Napier’s reasons for including these non-GAAP measures in this report in addition to a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated.

~~Revenues~~

Wealth management revenue decreased by $1.6 million, or 4%, to $41.3 million for the nine months ended September 30, 2020 from $42.9 million for the nine months ended September 30, 2019. This decrease is driven primarily by a 7% decrease in our average wealth management AUM for the nine months ended September 30, 2020 compared to the nine months ended

September 30, 2019. As of September 30, 2020, the concentration of assets in our wealth management channel was 91% blended assets, 6% equity and 3% fixed income, compared to 79% blended assets, 18% equity and 3% fixed income as of September 30, 2019.

Institutional and intermediary revenue decreased by $6.7 million, or 15%, to $38.3 million for the nine months ended September 30, 2020 from $44.9 million for the nine months ended September 30, 2019. This decrease is driven primarily by a 12%, or $1.4 billion, decrease in average institutional and intermediary AUM for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. As of September 30, 2020 the concentration of assets in our institutional and intermediary channel was 54% blended assets, 39% equity and 7% fixed income, compared to 56% blended assets, 38% equity and 6% fixed income as of September 30, 2019.

Distribution and shareholder servicing revenue decreased by $0.6 million, or 8%, to $7.1 million for the nine months ended September 30, 2020 from $7.8 million for the nine months ended September 30, 2019. This decrease is driven by a reduction in mutual fund and collective investment trust average AUM of 13% for the same period.

Custodial services revenue decreased by $0.6 million, or 12%, to $4.6 million for the nine months ended September 30, 2020 from $5.3 million for the nine months ended September 30, 2019. The decrease primarily relates to decreases in our collective trust AUM.

~~Operating Expenses~~

~~Our operating expenses decreased by $11.8 million, or 12%, to $84.3 million for the nine months ended September 30, 2020 from $96.1 million for the nine months ended September 30, 2019.~~

Compensation and related costs decreased by $5.9 million, or 10%, to $55.2 million for the nine months ended September 30, 2020 from $61.1 million for the nine months ended September 30, 2019. This change was primarily driven by a decrease in our workforce, coupled with a reduction in employee severance costs. This decrease was partially offset by an increase in the estimated incentive compensation for our investment team resulting from investment performance. When considered as a percentage of revenue, compensation and related costs was 59% for both the nine months ended September 30, 2020 and 2019. Given the declines in our revenue, we anticipate that our compensation ratio as a percentage of revenue will remain elevated in the near term compared to prior periods.

Distribution, servicing and custody expenses decreased by $1.9 million, or 20%, to $7.8 million for the nine months ended September 30, 2020 from $9.7 million for the nine months ended September 30, 2019. The decrease was generally attributable to a 13% decrease in mutual fund and collective investment trust average AUM for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, coupled with the completion of MNA's mutual fund fee restructure initiative during the first quarter of 2019, where a portion of these expenses are now borne by the mutual funds directly. As a percentage of mutual fund and collective investment trust average AUM, distribution, servicing and custody expense was 0.19% for the nine months ended September 30, 2020, compared to 0.21% for the nine months ended September 30, 2019.

Other operating costs decreased by $4.0 million, or 16%, to $21.2 million for the nine months ended September 30, 2020 from $25.2 million for the nine months ended September 30, 2019. This decrease was driven primarily by a $1.2 million gain recognized during the third quarter of 2020, which offset other operating costs, related to the reimbursement of prior expenses paid on behalf the Funds and CITs upon the settlement of their claim against a third party. This gain was coupled with an overall reduction in operational costs resulting from COVID-19 including a decrease in travel and facility ~~costs.~~costs, which we do not expect to remain at lower levels once the prevalence of COVID-19 has diminished. As a percentage of revenue, other operating costs were 20% for the ~~nine~~three months ended ~~September 30, 2020 was~~March 31, 2021 and 23% ~~compared to 24%~~ for ~~nine~~the three months ended ~~September 30, 2019.~~March 31, 2020.

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Non-Operating Income (Loss)

Non-operating ~~loss~~income for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was ~~$1.1~~$0.5 million, ~~a decrease~~an increase of ~~$7.3~~$4.8 million, from non-operating ~~income~~loss of ~~$6.2~~$4.3 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The following table reflects the components of non-operating income (loss) for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:

Nine months ended September 30, Period-to-Period
2020 2019 $ %
(in thousands)
Non-operating income (loss)
Interest expense $ (5 ) $ (26 ) $ 21
(81 )%
Interest and dividend income ⁽¹⁾
835
2,428
(1,593 ) (66 )%
Change in liability under tax receivable agreement ⁽²⁾
(1,912 ) (199 ) (1,713 ) 861 %
Net gains (losses) on investments ⁽³⁾
(5 ) 1,162
(1,167 ) (100 )%
Gain on sale of business ⁽⁴⁾
—
$ 2,883
$ (2,883 ) (100 )%
Total non-operating income $ (1,087 ) $ 6,248
$ (7,335 ) (117 )%


	Three months ended March 31,				Period-to-Period
	2021		2020		$		%
	(in thousands)
Non-operating income (loss)
Interest expense	$	(2)	$	(2)	$	—	—	%
Interest and dividend income (1)	123		357		(234)		(66)	%
Change in liability under tax receivable agreement (2)	—		(2,850)		2,850		(100)	%
Net gains (losses) on investments (3)	337		(1,832)		2,169		(118)	%

Total non-operating income (loss)	$	458	$	(4,327)	$	4,785	(111)	%

__________________________


~~(1)~~	The decrease in interest and dividend income for the nine months ended September 30, 2020 compared to 2019 is attributable to a decrease in investments, including U.S. Treasury notes and bills, corporate bonds and other short-term investments to optimize cash management opportunities, coupled with a decrease in interest rates.

~~(2)~~

The change in the liability under the tax receivable agreement for the nine months ended September 30, 2020 is driven by an increase in the Company's expected tax benefits under the tax receivable agreement with the other holders of units of Manning & Napier Group and the corresponding changes in the payment of such benefits. The change during the nine months ended September 30, 2020 is driven by the tax benefits realized with the enactment of the CARES Act.


~~(3)~~	The amount of net gain (loss) on investments held by us, to provide initial cash seeding for product development purposes and to hedge economic exposure to market movements on our deferred compensation plan, will vary depending on the performance and overall amount of our investments.


~~(4)~~	~~The gain on sale of business during the nine months ended September 30, 2019 is due to the completion of the sale of our wholly-owned subsidiary Perspective Partners, LLC on August 30, 2019.~~

(1)The decrease in interest and dividend income for the three months ended March 31, 2021 compared to 2020 is attributable to a decrease in investments, including U.S. Treasury notes and corporate bonds to optimize cash management opportunities, coupled with a decrease in interest rates.

(2)The change in the liability under the TRA for the three months ended March 31, 2020 is driven by an increase in the Company's expected tax benefits under the TRA with the other holders of units of Manning & Napier Group and the corresponding changes in the payment of such benefits. The change during the three months ended March 31, 2020 is a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") on March 27, 2020.

(3)The amount of net gain (loss) on investments held by us, to provide initial cash seeding for product development purposes and to hedge economic exposure to market movements on our deferred compensation plan, will vary depending on the performance and overall amount of our investments.

Provision for Income Taxes

~~We recognized a benefit from income taxes of less than $0.1 million for the nine months ended September 30, 2020, compared to a~~Our provision for income taxes ofwas $0.7 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2021, compared to a benefit of $3.2 million for the three months ended March 31, 2020. The change is attributed to the enactment of the CARES Act on March 27, 2020 which ~~includes,~~included, among other things, the elimination of certain restrictions on net operating losses. As a result, we recognized an income tax benefit related to the favorable rate applied to our net operating ~~losses.~~losses during the three months ended March 31, 2020. This decrease is partially offset by a higher portion of Manning & Napier Group's earnings subject to taxation at the C-Corporation level ~~due~~during the three months ended March 31, 2021 compared to the same period in 2020. Manning & Napier Inc.'s ~~increased~~ ownership of Manning & Napier Group was 88.9% as aof March 31, 2021, compared to 19.5% as of March 31, 2020. This increase is primarily the result of the redemption ~~completed~~and subsequent retirement of 60,012,419 Class A units of Manning & Napier Group on May 11, 2020.

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Supplemental Non-GAAP Financial Information

~~Beginning with the release of our operating results for the third quarter of 2019, as supplemental information we began providing a new non-GAAP measure, economic income.~~ Management uses economic income, economic net income and economic net income per adjusted share as financial measures to evaluate the profitability and efficiency of our business as a whole in the ordinary, ongoing and customary course of its operations. Economic income, economic net income and economic net income per adjusted share are not presented in accordance with GAAP.

Economic income ~~for periods beginning in and subsequent to January 1, 2019,~~ presents a non-GAAP financial measure of the controlling and non-controlling interests of Manning & Napier Group and excludes from income before provision for income taxes strategic restructuring and transaction costs, net. We define strategic restructuring and transaction costs, net, as items related to our ongoing strategic review focused on the evolution of our distribution strategy and technology initiatives. These costs include severance-related costs, certain consulting and other professional service fees, lease and other contract termination costs, and gain or loss on sale of a business. ~~Non-GAAP measures for the first and second quarters of 2019 have been restated to conform to the current period presentation.~~

Economic net income is a non-GAAP measure of after-tax operating performance and equals the Company’s income before provision for income taxes less adjusted income taxes. Adjusted income taxes are estimated assuming the exchange of all outstanding units of Manning & Napier Group into Class A common stock on a one-to-one basis. Therefore, all income of Manning & Napier Group allocated to the units of Manning & Napier Group is treated as if it were allocated to us and represents an estimate of income tax expense (benefit) at an effective rate of ~~39.3%~~11.5% and ~~29.0%~~(193.7%) for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and 15.0% and 29.0% for the nine months ended September 30, 2020 and 2019,~~ respectively, reflecting assumed federal, state and local income taxes.

Economic net income per adjusted share is a non-GAAP measure and is equal to economic net income divided by the weighted average adjusted Class A common shares outstanding. The number of weighted average adjusted Class A common shares outstanding for all periods presented is determined by assuming the weighted average exchangeable units of Manning & Napier Group, weighted average unvested stock units, weighted average unvested restricted stock awards, and weighted average vested stock options are converted into our outstanding Class A common stock as of the respective reporting date, on a one-to-one basis. Our management uses economic net income, among other financial data, to determine the earnings available to distribute as dividends to holders of its Class A common stock and to the holders of the units of Manning & Napier Group.

Non-GAAP measures are not a substitute for financial measures prepared in accordance with GAAP and therefore should not be used in isolation of, but in conjunction with, GAAP measures. Additionally, our non-GAAP measures may differ from similar measures used by other companies, even if similar terms are used to identify such measures.

The following table sets forth, for the periods indicated, our other financial and operating data:


	Three months ended March 31,
	2021		2020
	(in thousands, except share data)
Economic income (loss) (Non-GAAP)	$	7,569	$	(1,672)
Economic net income (Non-GAAP)	$	6,700	$	1,566
Economic net income per adjusted share (Non-GAAP)	$	0.29	$	0.02
Weighted average adjusted Class A common stock outstanding (Non-GAAP)	23,399,391		80,759,644

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Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands, except share data)
Economic income (loss) (Non-GAAP) $ 5,219
$ 5,177
$ 10,248

$ 13,220
Economic net income (Non-GAAP) $ 3,170
$ 3,676
$ 8,707

$ 9,386
Economic net income per adjusted share (Non-GAAP) $ 0.14
$ 0.05
$ 0.17

$ 0.12
Weighted average adjusted Class A common stock outstanding (Non-GAAP) 22,395,521
79,033,403
50,460,114
79,553,585

The following table sets forth, for the periods indicated, a reconciliation of non-GAAP financial measures to GAAP measures:


	Three months ended September 30,					Nine months ended September 30,							Three months ended March 31,
	2020		2019			2020			2019				2021		2020
	(in thousands, except share data)												(in thousands, except share data)
Net income attributable to Manning & Napier, Inc.	$	2,507	$	824		$	4,911		$	1,799		Net income attributable to Manning & Napier, Inc.	$	5,240	$	858
Add back: Net income (loss) attributable to noncontrolling interests	560		5,753			3,274			10,914			Add back: Net income (loss) attributable to noncontrolling interests	724		(23)

Add back: Provision for (benefit from) income taxes	1,738		150			(28		)	723			Add back: Provision for (benefit from) income taxes	703		(3,226)
Income (loss) before provision for (benefit from) income taxes	$	4,805	$	6,727		$	8,157		$	13,436		Income (loss) before provision for (benefit from) income taxes	$	6,667	$	(2,391)
Add back: Strategic restructuring and transaction costs, net ⁽¹⁾	414		(1,550		)	2,091			(216		)	Add back: Strategic restructuring and transaction costs, net (1)	902		719
Economic income (loss) (Non-GAAP)	$	5,219	5,177			10,248			13,220			Economic income (loss) (Non-GAAP)	$	7,569	(1,672)
Adjusted income taxes (Non-GAAP)	2,049		1,501			1,541			3,834			Adjusted income taxes (Non-GAAP)	869		(3,238)
Economic net income (Non-GAAP)	$	3,170	$	3,676		$	8,707		$	9,386		Economic net income (Non-GAAP)	$	6,700	$	1,566

Weighted average shares of Class A common stock outstanding - Basic	16,176,280		15,290,595			16,041,128			15,163,205			Weighted average shares of Class A common stock outstanding - Basic	17,026,500		15,812,951
Assumed vesting, conversion or exchange of:												Assumed vesting, conversion or exchange of:
Weighted average Manning & Napier Group, LLC units outstanding (noncontrolling interest)	2,021,781		62,034,200			30,713,850			62,617,270			Weighted average Manning & Napier Group, LLC units outstanding (noncontrolling interest)	2,021,781		62,034,200
Weighted average unvested restricted stock units and share awards	3,562,979		1,708,608			3,306,941			1,773,110			Weighted average unvested restricted stock units and share awards	3,764,744		2,745,827
Weighted average vested stock options	634,481		—			398,195			—			Weighted average vested stock options	586,366		166,666
Weighted average adjusted shares (Non-GAAP)	22,395,521		79,033,403			50,460,114			79,553,585			Weighted average adjusted shares (Non-GAAP)	23,399,391		80,759,644

Economic net income per adjusted share (Non-GAAP)	$	0.14	$	0.05		$	0.17		$	0.12		Economic net income per adjusted share (Non-GAAP)	$	0.29	$	0.02

__________________________

⁽¹⁾ Strategic restructuring and transaction costs, net, are included in the following financial statement line items of our Consolidated Statements of Operations:


	Three months ended March 31,
	2021		2020
	(in thousands)
Compensation and related costs	$	484	$	686
Other operating costs	418		33

Total strategic restructuring and transaction costs	$	902	$	719

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(in thousands)
Compensation and related costs $ 63
$ 677
$ 903
$ 1,787
Other operating costs 351
656
1,188
880
Gain on sale of business —
(2,883 ) —
(2,883 )
Total strategic restructuring and transaction costs $ 414
$ (1,550 ) $ 2,091
$ (216 )

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Liquidity and Capital Resources

Historically, our cash and liquidity needs have been met primarily through cash generated by our operations and cash and cash equivalents on hand. Our financial condition at ~~September 30, 2020~~March 31, 2021 was highly liquid, with a significant amount of our assets comprised of cash and cash equivalents, accounts receivable and investment securities held by us for the purpose of optimizing short-term cash management and providing initial cash seeding for product development purposes.

The following table sets forth certain key financial data relating to our liquidity and capital resources as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020:


	September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
	(in thousands)					(in thousands)
Cash and cash equivalents	$	52,175	$	67,088	Cash and cash equivalents	$	45,195	$	57,635
Accounts receivable	$	10,866	$	10,182	Accounts receivable	10,776		11,915
Investment securities	$	23,439	$	90,467	Investment securities	23,905		23,497
Amounts payable under tax receivable agreement ⁽¹⁾	$	19,433	$	17,521	Amounts payable under tax receivable agreement (1)	$	18,979	$	18,979

________________________

~~(1)~~

~~In light of numerous factors affecting our obligation to make such payments, the timing and amounts of any such actual payments are based on our best estimate as of September 30, 2020 and~~ ~~December 31, 2019, including our ability to realize the expected tax benefits. Actual payments may significantly differ from estimated payments.~~

(1)In light of numerous factors affecting our obligation to make such payments, the timing and amounts of any such actual payments are based on our best estimate as of March 31, 2021 and December 31, 2020, including our ability to realize the expected tax benefits. Actual payments may significantly differ from estimated payments.

We have no material assets other than our ownership of Class A units of Manning & Napier Group and, accordingly, will depend on distributions from Manning & Napier Group to pay taxes and operating expenses, as well as any dividends we may pay. As managing member of Manning & Napier Group, we will determine the timing and amount of any distributions to be paid to its members. We intend to cause Manning & Napier Group to distribute cash to its members, including us, in an amount sufficient to cover taxes and operating expenses, including dividends, if any, declared by us. If we do cause Manning & Napier Group to make such distributions, Manning & Napier Group Holdings, LLC ("M&N Group ~~Holdings, MNCC~~Holdings"), Manning & Napier Capital Company, LLC ("MNCC") and any other holders of units of Manning & Napier Group will be entitled to receive equivalent distributions on a pari-passu basis. ~~On April 22, 2020~~Due to the market volatility and corresponding earnings volatility that could occur stemming from the COVID-19 pandemic, the Board of Directors ~~determined to suspend our quarterly~~did not approve any cash ~~dividend~~dividends on our Class A common stock ~~due~~since the dividend paid on May 1, 2020. The historical quarterly cash dividends on our Class A common stock were, and we believe any future dividends would be, funded from our portion of distributions made by Manning & Napier Group, from its available cash generated from operations. While our operating earnings and margins have improved, they remain below industry averages as our digital transformation and corresponding restructuring continues. Our management team and the Board of Directors will continue to ~~the market volatility~~monitor our financial results and ~~ongoing uncertainty resulting from the COVID-19 pandemic.~~liquidity and will determine whether or not to pay future dividends on a quarterly basis.

In determining the sufficiency of liquidity and capital resources to fund our business, we regularly monitor our liquidity position, including among other things, cash, working capital, long-term liabilities, lease commitments and operating company distributions.

On ~~March 27, 2020,~~February 3, 2021, the ~~U.S. government enacted~~Board of Directors approved a share repurchase program authorizing the ~~CARES Act~~purchase of up to $10.0 million of Manning & Napier Inc. Class A common shares. Given the strength of our balance sheet and cash position, the Company plans to use the approved share repurchase program to, at a minimum, offset dilution created from the awards issued under the Company’s long-term incentive plan to our employees during the first quarter of 2021. These equity awards were valued at approximately $6 million and will vest over the next 5 years. The authority to repurchase shares, which ~~includes, among~~will be exercised from time to time as market conditions warrant, is subject to regulatory considerations and will expire on December 31, 2021. The timing, amount, and other ~~things,~~terms and conditions of any repurchases will be determined by management at its discretion based on a variety of factors, including the ~~ability~~market price of shares, general market and economic conditions, and legal requirements. The repurchase program may be modified, discontinued or suspended at any time. We intend to ~~carryback net operating losses from 2018, 2019~~fund the program through cash on hand and 2020 to prior years. We expect to carryback net operating losses generated in 2018 and 2019 to prior years and claim refunds when the federal corporate tax rate was 34% compared to the current statutory rate of 21%.future cash flow. During the ~~nine months ended September 30, 2020, we recognized an income tax benefit~~first quarter of 2021, Manning & Napier Inc. purchased a total of 412,405 Class A common shares using approximately ~~$2.3~~$3.0 million related to the favorable rate applied to our net operating losses. As a result, we increased the amounts payable under the tax receivable agreement by $1.9 million, representing 85% of the applicable cash savings. As of September 30, 2020, we have recorded an estimated income tax refund of approximately $4.3 million within our prepaid expenses and other assets, of which we expect to pay out 85% under our tax receivable agreement. At this time, we do not anticipate the enactment of the CARES Act to have any other material impacts to our short- and long-term liquidity.in cash.

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As of ~~September 30, 2020,~~March 31, 2021, a total of 2,021,781 units of Manning & Napier Group were held by the noncontrolling interests, including M&N Group Holdings and MNCC. Pursuant to the terms of the annual exchange process, such units may be tendered for exchange or redemption. On March 15, 2020, certain legacy shareholders and William Manning, the former Chairman of our Board of Directors, tendered a total of 60,012,419 Class A units, including 59,957,419 units held by William Manning, for cash or shares of our Class A common stock pursuant to the terms of the annual exchange process.

~~The independent directors, on behalf of~~2021, the Company decided to settle the transaction utilizing approximately $90.8 million in cash, including approximately $90.7 million paid to Mr. Manning. Manning & Napier Group completed the redemption on May 11, 2020, with payment made from its cash, cash equivalents and proceeds from the sale of investment

~~securities. Subsequent to the redemption, the Class A units were retired and as a result, Manning & Napier's ownership of Manning & Napier Group increased from 19.5% to 88.2%.~~

~~Following the settlement of the redemption~~received notice that 1,592,969 of Class A units of Manning & Napier Group wewill be tendered for redemption or exchange. The independent directors, on behalf of the Company, have ~~significantly less cash and cash equivalents~~decided that such exchange will be settled in 1,592,969 shares of unregistered Class A Common Stock of the Company. The Company expects the settlement of the exchange to ~~meet working capital requirements and liquidity needs.~~ occur later in the year. As a result of the exchange, Manning & Napier, Inc. will acquire an equivalent number of Class A units of Manning & Napier Group, resulting in an increase in its ownership of Manning & Napier Group from approximately 89% to 98%.

With approximately ~~$75.6~~$69.1 million in cash and investment securities on hand as of ~~September 30, 2020,~~March 31, 2021, we expect that we have sufficient liquidity available to meet our needs for the foreseeable future. During the three months ended March 31, 2021 we did not generate net cash from operations, which was driven by the timing of accrued annual incentive compensation payments during the first quarter. We believe cash on hand and cash generated from operations will be sufficient over the next twelve months to meet our working capital requirements.

Cash Flows

The following table sets forth our cash flows for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019~~.2020. Operating activities consist primarily of net income subject to adjustments for changes in operating assets and liabilities, equity-based compensation expense, changes in the liability under the TRA, deferred income tax expense ~~gain on sale of intangible assets and gains on sale of business~~ and depreciation and amortization. Investing activities consist primarily of the purchase and sale of investments for the purpose of providing initial cash seeding for product development and cash management purposes ~~gain on sale of intangible assets,~~ and purchases of property and equipment. Financing activities consist primarily of distributions to noncontrolling interests, purchases of treasury stock, dividends paid on our Class A common stock, payment of shares withheld to satisfy withholding requirements and purchases of Class A units held by noncontrolling interests of Manning & Napier Group.


	Three months ended March 31,
	2021		2020
	(in thousands)
Net cash used in operating activities	$	(5,727)	$	(8,976)
Net cash (used in) provided by investing activities	(64)		17,258
Net cash used in financing activities	(6,649)		(351)
Net change in cash and cash equivalents	$	(12,440)	$	7,931

Nine months ended September 30,
2020 2019
(in thousands)
Net cash provided by operating activities $ 11,199
$ 8,717
Net cash provided by investing activities 66,597
29,289
Net cash used in financing activities (92,709 ) (9,209 )
Net change in cash and cash equivalents $ (14,913 ) $ 28,797

~~Nine~~Three Months Ended ~~September 30, 2020~~ March 31, 2021 Compared to ~~Nine~~Three Months Ended~~September 30, 2019~~ March 31, 2020

Operating Activities

Operating activities ~~provided $11.2~~used $5.7 million and ~~$8.7~~$9.0 million of net cash for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. This overall ~~$2.5~~$3.2 million ~~increase~~decrease in net cash ~~provided~~used in operating activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2019~~2020 was attributed to an increase in net income after adjustment for non-cash items of approximately $4.6 million during the three months ended March 31, 2021 compared to the same period of 2020. The increase in net income after adjustment for non-cash items of $8.0 million during the three months ended March 31, 2021 compared to $3.4 million during the same period in 2020 was driven by higher revenues resulting from an increase in our average AUM, coupled with a decrease in operating expenses. This decrease in net cash used was partially offset by changes in operating assets and operating liabilities of approximately ~~$1.7~~$1.4 million driven by the timing of payments, including compensation and benefits and other accrued costs, partially offset by increased implementation costs during the nine months ended September 30, 2020 related to our technology enhancements. The increase in net cash provided was also attributed to an increase in net income after adjustment for non-cash items of approximately $0.8 million during the nine months ended September 30, 2020 compared to the same period of 2019.costs.

Investing Activities

Investing activities ~~provided $66.6~~used $0.1 million and ~~$29.3~~provided $17.3 million of net cash for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. This change was driven by ~~an increase~~a decrease in cash from investing activities of ~~$38.9~~$17.2 million due to our funding of and timing of activity within our investment ~~securities, primarily related to~~securities. During the ~~sale of investment securities in order facilitate the redemption of Class A units during the nine~~three months ended ~~September 30, 2020. During the nine months ended September 30, 2020,~~March 31, 2021, we ~~received~~used approximately ~~$64.2~~$0.1 million, net, from the purchase and sale of certain securities for cash management purposes compared to ~~$28.2~~receiving $17.2 million in the same period of ~~2019.~~ ~~In addition,~~ ~~we received approximately $2.4 million and less than~~2020. We used an additional $0.1 million ~~net from seeding and redemption activity~~ of ~~certain seeded portfolios~~ incash for the ~~nine months ended September 30, 2020~~ ~~and 2019, respectively.~~ ~~Our~~ purchases of property and equipment ~~was approximately $0.2 million~~ during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$1.7 million in~~ the same period of ~~2019.~~2020.

Financing Activities

Financing activities used ~~$92.7~~$6.6 million and ~~$9.2~~$0.4 million of net cash for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. This overall ~~$83.5~~$6.3 million increase in net cash used in financing activities was primarily the result of ancash used for

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the payment of shares withheld to satisfy withholding requirements in connection with the vesting of restricted stock units and exercise of stock options and the purchase of treasury shares during the three months ended March 31, 2021. The increase in cash used for the redemption of Class A units of Manning & Napier Group pursuant to the annual exchange process, existing since the time of our IPO, of $90.8 million in 2020 compared to $3.1 million in 2019. This increase of $87.7 million in 2020 compared to the prior year was due to a high number of units redeemed in 2020. The overall increase in cash used for financing activities was partially offset by a reduction in distributions to noncontrolling interests of $4.9 million. This decrease was due to lower net income during the nine months ended September 30, 2020 compared to the same period in 2019, coupled

with the impact of the redemption of Class A units of Manning & Napier Group during 2020 that resulted in the increase in our ownership of Manning & Napier Group from 19.5% to 88.2%. In addition, during the nine months ended September 30, 2020 we used approximately $1.0 million for payment of shares withheld to satisfy withholding requirements on ~~vested~~ equity awards of $3.3 million compared to ~~approximately $0.1 million~~2020 is attributed to the timing and amount of stock options exercised during the ~~same period in 2019.~~

~~Dividends~~

~~On October 22, 2019,~~three months ended March 31, 2021. In addition, we used cash of $3.0 million for the ~~Board~~purchase of ~~Directors declared a $0.02 per~~treasury shares during the three months ended March 31, 2021 under the share ~~dividend~~repurchase program of up to ~~the holders~~$10.0 million of Manning & Napier Inc. Class A common ~~stock. The dividend was paid~~shares approved on February 3, ~~2020 to shareholders of record as of January 15, 2020.~~2021.

On March 3, 2020, the Board of Directors declared a $0.02 per share dividend to the holders of Class A common stock. The dividend was paid on May 1, 2020 to shareholders of record as of April 1, 2020.

Dividends

We have funded our historical quarterly cash dividends on our Class A common stock, and we believe any future dividends would be funded from our portion of distributions made by Manning & Napier Group, from its available cash generated from operations. ~~On April 22, 2020,~~Due to the market volatility and corresponding earnings volatility that could occur stemming from the COVID-19 pandemic, the Board of Directors ~~determined to suspend our quarterly~~has not approved any cash ~~dividend~~dividends on our Class A common stock ~~due to~~since the ~~market volatility~~dividend paid on May 1, 2020. The historical quarterly cash dividends on our Class A common stock were, and ~~ongoing uncertainty resulting~~we believe any future dividends would be, funded from ~~the COVID-19 pandemic. Company~~our portion of distributions made by Manning & Napier Group, from its available cash generated from operations. While our operating earnings and margins have improved, they remain below industry averages as our digital transformation and corresponding restructuring continues. Our management team and the Board of Directors will continue to monitor our ~~ability~~financial results and liquidity and will determine whether or not to ~~declare and~~ pay future dividends on a ~~quarter-by-quarter~~quarterly basis.

The declaration and payment of all future dividends, if any, will be at the sole discretion of our Board of Directors. In determining the amount of any future dividends, our Board of Directors will take into account:

•the financial results of Manning & Napier Group;

•our available cash, as well as anticipated cash requirements, including any debt servicing and payments required under the tax receivable agreement or the Exchange Agreement;

•our capital requirements and the capital requirements of our subsidiaries, including Manning & Napier Group;

•contractual, legal, tax and regulatory restrictions on, and implications of, the payment of dividends by us to our shareholders or distributions by Manning & Napier Group to us, including the obligation of Manning & Napier Group to make tax distributions to its unitholders, including us;

•general economic and business conditions, including the impact of the COVID-19 pandemic and state and regional stay-at-home orders; and

•any other factors that our Board of Directors may deem relevant.

We have no material assets other than our ownership of Class A units of Manning & Napier Group and, accordingly, will depend on distributions from Manning & Napier Group to fund any dividends we may pay. As managing member of Manning & Napier Group, we will determine the timing and amount of any distributions to be paid to its members, other than mandatory tax distributions required under Manning & Napier Group's operating agreement. We intend to cause Manning & Napier Group to distribute cash to its members, including us, in an amount sufficient to cover dividends, if any, declared by us. If we do cause Manning & Napier Group to make such distributions, M&N Group Holdings, MNCC and any other holders of units of Manning & Napier Group will be entitled to receive equivalent distributions on a pari passu basis.

On March 2, 2020, the Company’s Board of Directors had declared a $2.0 million distribution from Manning & Napier Group to its unit holders. Subsequent to March 3, 2020, there was significant disruption to global commercial activity as a result of the spread of COVID-19, which contributed to significant volatility and a decline in the value of many securities in the financial markets. As a result, the Company’s Board of Directors determined on March 24, 2020 to withdraw its approval of that distribution from Manning & Napier Group. In July 2020,2021, the Board of Directors approved a ~~$1.5~~$2.5 million distribution from Manning & Napier Group to Manning & Napier ~~Inc.~~ and the noncontrolling interests of Manning & Napier Group, of which approximately ~~$0.2~~$0.3 million was paid to the noncontrolling ~~interests~~members of Manning & Napier Group. ~~In October 2020,~~

On April 19, 2021, the Board of Directors approved a ~~$1.3~~$2.5 million distribution from Manning & Napier Group to Manning & Napier ~~Inc.~~ and the noncontrolling interests of Manning & Napier Group, of which approximately ~~$0.1~~$0.3 million was paid to the noncontrolling ~~interests~~members of Manning & Napier Group.

Off Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of ~~September 30, 2020~~.March 31, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a "smaller reporting company," we are not required to provide this information.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2020~~March 31, 2021 pursuant to Rule 13a-15 under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~September 30, 2020~~,March 31, 2021, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2020~~March 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1A. Risk Factors

~~In addition to the other information contained in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed~~We have set forth in Item 1A to our Annual Report on Form 10-K for the year ended December 31, ~~2019 (the “2019 Form 10-K”) in evaluating~~2020 risk factors relating to our business, our industry, our structure ~~future results~~ and our Class A common stock.

~~The information presented below updates and supplements those~~ Readers of this Quarterly Report on Form 10-Q are referred to such Item 1A for a more complete understanding of risks concerning our company. There have been no material changes in our risk factors ~~for events, changes and developments~~ since ~~the filing of the 2019~~those published in such Form 10-K and should be read in conjunction with the risks and other information contained in the 2019 Form 10-K. The risks described in our 2019 Form 10-K, as updated below and summarized in Part I, Item 2 under the heading "Summary of Principal Risks" are not the only risks we face. Additional risks that we do not presently know or that we currently believe are not material could also materially adversely affect our business, financial position, future results and prospects.

~~Risks Related to our Business~~

Our revenues are dependent on the market value and composition of our AUM, which are subject to significant fluctuations and have been impacted by the novel coronavirus (COVID-19) pandemic and its effect on the U.S. and global economy.

We derive the majority of our revenue from investment management fees, typically calculated as a percentage of the market value of our AUM. As a result, our revenues are dependent on the value and composition of our AUM, all of which are subject to fluctuation due to many factors, including:

~~Declines in prices of securities in our portfolios.~~ The prices of the securities held in the portfolios we manage may decline due to any number of factors beyond our control, including, among others, the impacts of the novel coronavirus (COVID-19) pandemic on the companies whose securities are held in the portfolios we manage, declining stock or commodities markets, changes in interest rates, a general economic downturn, including as a result of the COVID-19 pandemic, political uncertainty, pandemics or other health crises, or acts of terrorism. The U.S. and global financial markets continue to be subject to uncertainty and instability. Such factors could cause an unusual degree of volatility and price declines for securities in the portfolios we manage;

~~Redemptions and other withdrawals.~~ Our clients generally may withdraw their funds at any time, on very short notice and without any significant penalty. A substantial portion of our revenue is derived from investment advisory agreements that are terminable by clients upon short notice or no notice and investors in the mutual funds we advise can redeem their investments in those funds at any time without prior notice. Also, new clients and portfolios may not have the same client retention characteristics as we have experienced in the past. In a declining stock market, the pace of redemptions could accelerate;

~~Investment performance.~~ Our ability to deliver strong investment performance depends in large part on our ability to identify appropriate investment opportunities in which to invest client assets. If we are unable to identify sufficient appropriate investment opportunities for existing and new client assets on a timely basis, our investment performance could be adversely affected. The risk that sufficient appropriate investment opportunities may be unavailable is influenced by a number of factors including general market conditions. If our portfolios perform poorly, even over the short-term, as compared with our competitors or applicable third-party benchmarks, or the rankings of mutual funds we manage decline, we may lose existing AUM and have difficulty attracting new assets; and

~~Competition from passive strategies.~~There has been an increasing preference for passive investment products, such as index and exchange-traded funds ("ETFs") over active strategies managed by asset managers. If this market preference continues, existing and prospective clients may choose to invest in passive investment products, our growth strategy may be impaired and our AUM may be negatively impacted.

The market disruption caused by COVID-19 may continue for as long or longer than the restrictions on general business operations and in-person interactions imposed by federal, state and local governments. If this period of economic disruption and volatility continues or worsens, our AUM could be reduced, and if we are unable to reduce expenses, our net income will be reduced in the near term. Should the COVID-19 pandemic continue for an extended period of time, our business, financial condition, results of operations and cash flows may likewise be materially adversely impacted for an extended period of time.

~~If any of the factors described above cause a decline in our AUM, it would result in lower investment management revenues~~. ~~If our revenues decline without a commensurate reduction in our expenses, our net income will be reduced and our business will be adversely affected.~~

~~We derive substantially all of our revenues from contracts and relationships that may be terminated upon short or no notice.~~

We derive substantially all of our revenues from investment advisory and sub-advisor agreements, all of which are terminable by clients upon short notice or no notice and without any significant penalty.

Our mutual fund and collective investment trust relationships may be terminated or not renewed for any number of reasons. Our investment management agreements with mutual funds, as required by law, are generally terminable by the funds’ board of directors or a vote of the majority of the funds’ outstanding voting securities on not more than 60 days’ written notice. After an initial term, each fund’s investment management agreement must be approved and renewed annually by such fund’s board, including by its independent members. Similarly, our investment management agreements with the collective investment trusts may be terminated at any time by Exeter Trust Company's board of directors, which includes independent members. As of September 30, 2020, mutual fund and collective investment trust relationships represent 29% of our AUM and 29% of our revenue for the ~~quarter ended September 30, 2020.~~

Our clients will likely be impacted by the overall decline in the U.S. economy, which may cause them to terminate their relationships with us. The longer the economic results of the COVID-19 pandemic negatively impact our clients, clients may seek to withdraw their funds from our investment solutions. If a significant proportion of our clients withdraw their funds, our AUM and results of operations will be materially adversely impacted.

~~The decrease in revenues that could result from the termination of a material client relationship or group of client relationships could have an adverse effect on our business. During the fiscal~~ year ended December 31, ~~2019~~2020.

Item 2. Unregistered Sales of Equity Securities and ~~the quarter ended September 30, 2020, other than our relationship with the Fund, there were no customers that provided over 10 percent~~Use of ~~our total revenue.~~Proceeds

~~We may not realize the expected benefits from our restructuring plan and other operational improvement initiatives relating~~

~~to our strategic review of our business.~~

We commenced a strategic review of our business upon the appointment of our new Chief Executive, Marc Mayer, in early 2019. Our comprehensive review resulted in changes to our overall distribution strategy, our suite of investment offerings, and our operational platform. The objective of this review was to improve financial results for stockholders and investment results for clients by more clearly prioritizing our strengths, eliminating distractions and sub-scale offerings, and increasing productivity across the firm through improved technology. As a result of this strategic review, we incurred approximately

$11.1 million of strategic restructuring and transaction costs during 2019 (excluding a $2.9 million gain on the sale of PPI). These charges consisted of $3.4 million of employee severance costs and $7.7 million of other operating costs, which included approximately $6.3 million of impairment charges stemming from the write-off of existing contracts that we will not be utilizing as we move forward with a new third-party service provider to leverage its platform in an effort to expand our digital capabilities. During the nine months ended September 30, 2020, we recognized $2.1 million of strategic restructuring and transaction costs and we will likely incur additional costs in the future as a result of this strategic review. There can be no assurance that the costs of undertaking our operational improvement initiatives will be offset by future earnings that may result from the improvements, and it is possible that we will not realize the expected benefits from our operational improvement initiativesPursuant to the ~~extent we anticipate or at all.~~

~~Our portfolios may not obtain attractive returns under certain market conditions or at all~~.

The goal of our investment process is to provide competitive absolute returns over full market cycles. Accordingly, our portfolios may not perform well compared to benchmarks or other investment managers’ strategies during certain periods of time, under certain market conditions, or after specific market shocks. Underperformance may negatively affect our ability to retain clients and attract new clients. We are likely to be most out of favor when the markets are running on positive or negative price momentum and market prices become disconnected from underlying investment fundamentals. During and shortly following such periods of relative under performance, we are likely to see our highest levels of client turnover, even if our absolute returns are positive. Loss of client assets and the failure to attract new clients could adversely affect our revenues and growth.

Difficult market conditions, like those during the current COVID-19 pandemic, can adversely affect our strategies in many ways, including by negatively impacting their performance and reducing their ability to raise or deploy capital, which could materially reduce our revenues and adversely affect our business, financial condition or results of operations.

Significant disruptions and volatility in the global financial markets and economies, like the current conditions caused by the COVID-19 pandemic, could impair the investment performance of our strategies. Although we seek to generate consistent, positive, absolute returns across all market cycles, our strategies have been and may be materially affected by conditions in the global financial markets and economic conditions. The global market and economic climate may become increasingly uncertain due to numerous factors beyond our control, including but not limited to, the duration of the COVID-19 pandemic and resulting limitations on business operations in the U.S., concerns related to unpredictable global market and economic factors, uncertainty in U.S. federal fiscal, tax, trade or regulatory policy and the fiscal, tax, trade or regulatory policy of foreign governments, rising interest rates, inflation or deflation, the availability of credit, performance of financial markets, terrorism, natural or biological catastrophes, public health emergencies, or political uncertainty.

A general market downturn, a specific market dislocation or deteriorating economic conditions may cause a material reduction in our revenues and adversely affect our business, financial condition or results of operations by causing:

~~A decline in AUM, resulting in lower management fees and incentive income.~~

~~An increase in the cost of financial instruments, executing transactions or otherwise doing business.~~

~~Lower or negative investment returns, which may reduce AUM and potential incentive income.~~

~~Reduced demand for assets held~~share repurchase program approved by our ~~funds, which would negatively affect our funds’ ability~~Board of Directors in February 2021 for up to ~~realize value from such assets.~~

~~Increased investor redemptions or greater demands for enhanced liquidity or other terms, resulting in a reduction in AUM, lower revenues and potential increased difficulty in raising new capital.~~

During the first quarter of 2020 when the COVID-19 pandemic began, there was a global market downturn which caused a decline in our AUM primarily due to market depreciation. While our AUM as of September 30, 2020 has since increased by $2.2 billion since March 31, 2020, our AUM has decreased by $0.2 billion, or 1%, since December 31, 2019. The decrease was driven by net client cash outflows of $1.5 billion, partially offset by market appreciation of $1.3 billion. If these conditions continue, our business, financial condition, results of operations and cash flows may be materially adversely impacted for an extended period of time.

Furthermore, while difficult market and economic conditions and other factors can potentially increase investment opportunities over the long term, such conditions and factors also increase the risk of increased investment losses and additional regulation, which may impair our business model and operations. Our strategies may also be adversely affected by difficult market conditions if we fail to assess the adverse effect of such conditions, which would likely result in significant reductions in the returns of those strategies. Moreover, challenging market conditions may prompt industry-wide reductions in fees. In response to competitive pressures or for any other reason, we may reduce or change our fee structures, which could reduce the amount of fees and income that we may earn relative to AUM.

An investment in our Class A common stock is not an alternative to investing in our strategies, and the returns of our strategies should not be considered as indicative of any returns expected on our Class A common stock, although if our strategies perform poorly, our revenue could be materially adversely impacted, which may in turn impact the returns on our Class A common stock.

The returns on our Class A common stock are not directly linked to the historical or future performance of our investment strategies. Even if our strategies experience positive performance and our AUM increases, holders$10.0 million of our Class A common ~~stock may not experience a corresponding positive return on their Class A common stock.~~

However, poor performance of our strategies could cause a decline in our revenues, and may therefore have a negative effect on our performance and the returns on our Class A common stock. If we fail to meet the expectations of our clients or otherwise experience poor performance, whether due to difficult economic and financial conditions or otherwise, our ability to retain existing AUM and attract new clients could be materially adversely affected. In turn, the fees that we would earn would be reduced and our business, financial condition or results of operations would suffer, thus negatively impacting the price of our Class A common stock. Furthermore, even if the investment performance of our strategies is positive, our business, financial condition or results of operations and the price of our Class A common stock could be materially adversely affected if we are unable to attract and retain additional AUM consistent with our past experience, industry trends or investor and market expectations.

~~The loss of key investment and sales professionals, members of our senior management team, or difficulty integrating new executives, could have an adverse effect on our business.~~

We depend on the skills, expertise and institutional knowledge of our key employees, including qualified investment and sales professionals and members of our senior management team, and our success depends on our ability to retain such key employees. Our investment professionals possess substantial experience in investing and have been primarily responsible for the historically attractive investment performance we have achieved. We particularly depend on our executive officers as well as senior members of our research department. As part of our strategic review of our business, we have experienced a reduction in headcount from 366 at January 1, 2019 to 281 employees at September 30, 2020. This and any future reductions to headcount may result in the loss of expertise and institutional knowledge and could adversely affect our business.

We have had significant changes in executive leadership and more could occur. Changes to strategic or operating goals, which can occur with the appointment of new executives, can create uncertainty, and may ultimately be unsuccessful. In addition, executive leadership transition periods, including adding new personnel, could be difficult as new executives gain an understanding of our business and strategy. Difficulty integrating new executives, or the loss of key individuals could limit our ability to successfully execute our business strategy and could have an adverse effect on our overall financial condition.

Competition for qualified investment, sales and top level management professionals is intense. Attracting qualified personnel, including top level management, may take time and we may fail to attract and retain qualified personnel including

top level management in the future. Our ability to attract and retain our executive officers and other key employees will depend heavily on our business strategy, corporate culture and the amount and structure of compensation. We have historically utilized a compensation structure that uses a combination of cash and equity-based incentives as appropriate. However, our compensation may not be effective to recruit and retain the personnel we need if our overall compensation packages are not competitive in the marketplace. Any cost-reduction initiative or adjustments or reductions to compensation could negatively impact our ability to retain key personnel, as could changes to our management structure, corporate culture and corporate governance arrangements.

~~We may be required to reduce the fees we charge, or our fees may decline due to changes in our AUM composition, which could have an adverse effect on our profit margins and results of operations.~~

Our current fee structure may be subject to downward pressure due to a variety of factors, including a trend in recent years toward lower fees in the investment management industry. We may be required to reduce fees with respect to both the separate accounts we manage and the mutual funds and collective trust funds we advise. We may charge lower fees in order to attract future new business, which may result in us having to also reduce our fees with respect to our existing business. Duringshares, during the first quarter of ~~2019,~~2021, we completed the effort of restructuring fees for many of our mutual funds and collective trust vehicles. Given the overall pressure on fees that all active managers are facing, we believe that bringing our fund fees to a more competitive level will enhance our ability to attract additional business in the future. The fee restructuring reduced the management fees on our existing business, and may fail to attract additional business sufficient to offset any reduction in related operating expenses. Any further fee reductions on existing or future new business could have an adverse effect on our profit margins and results of operations.

~~Our AUM may be concentrated in certain strategies.~~

Client purchase and redemption activity may result in AUM concentrations with certain of our investment strategies. As a result, a substantial portion of our operating results may depend upon the performance of these strategies. If we sustain poor investment performance or adverse market conditions, clients may withdraw their investments or terminate their investment management agreements. To the extent any of these strategies is concentrated in an industry or geographic area that is disproportionately negatively impacted by the COVID-19 pandemic, the concentration of our AUM in those strategies will likely have a disproportionately negative impact on our revenues. These conditions would result in a reduction in our revenues from these strategies, which could have an adverse effect on our earnings and financial condition.

~~Our business is primarily focused in certain targeted geographic regions making us vulnerable to risks associated with having geographically concentrated operations.~~

Although our client base is national, we are primarily focused in certain targeted geographic regions, including the northeastern and southeastern regions of the United States. Furthermore, our review of our intermediary and institutional distribution strategy resulted in changes to our territory coverage and servicing efforts in order to more effectively service our existing clients with our team, while concentrating on geographies with the greatest chances for growth. This could have the effect of increasing the risks associated with having geographically concentrated operations, including increasing the risk that our business will be negatively impacted by the COVID-19 pandemic if its impacts are concentrated in any of these geographic areas. Our business, financial condition and results of operations may be susceptible to regional economic downturns and other regional factors.

Several of our portfolios involve investing principally in the securities of non-U.S. companies, which involve foreign currency exchange risk, and tax, political, social and economic uncertainties and risks.

~~As of September 30, 2020, approximately 21% of our AUM across all of our portfolios was invested in securities of non-U.S. companies~~. ~~Fluctuations in foreign currency exchange rates could negatively affect the returns of our clients who are invested in these strategies~~. An increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our AUM, which, in turn, could result in lower revenue since we report our financial results in U.S. dollars.

Investments in non-U.S. issuers may also be affected by tax positions taken in countries or regions in which we are invested as well as political, social and economic uncertainty. Declining tax revenues may cause governments to assert their ability to tax the local gains and/or income of foreign investors (including our clients), which could adversely affect clients’ interests in investing outside their home markets. Many financial markets are not as developed, or as efficient, as the U.S. financial markets, and as a result, those markets may have limited liquidity and higher price volatility and may lack established regulations. Liquidity may also be adversely affected by political or economic events, government policies, social or civil unrest within a particular country, and our ability to dispose of an investment may also be adversely affected if we increase the size of our investments in smaller non-U.S. issuers. Non-U.S. legal and regulatory environments, including financial accounting standards and practices, may also be different, and there may be less publicly available information about such

companies. These risks could adversely affect the performance of our strategies that are invested in securities of non-U.S. issuers and may be particularly acute in the emerging or less developed markets in which we invest.

~~The historical returns of our existing portfolios may not be indicative of their future results or of the portfolios we may develop in the future~~.

The historical returns of our portfolios and the ratings and rankings we or the mutual funds that we advise have earned in the past should not be considered indicative of the future results of these portfolios or of any other portfolios that we may develop in the future. The investment performance we achieve for our clients varies over time and the variance can be wide. The ratings and rankings we or the mutual funds we advise have earned are typically revised monthly. The historical performance and ratings and rankings included in this report are as of September 30, 2020 and for periods then ended except where otherwise stated. The performance we have achieved and the ratings and rankings earned at subsequent dates and for subsequent periods may be higher or lower and the difference could be material. Our portfolios’ returns have benefited during some periods from investment opportunities and positive economic and market conditions. In other periods, general economic and market conditions have negatively affected our portfolios’ returns. These negative conditions may occur again, and in the future we may not be able to identify and invest in profitable investment opportunities within our current or future portfolios.

~~Support provided to new products may reduce fee income, increase expenses and expose us to potential loss on invested capital.~~

We may support the development of new investment products by waiving all or a portion of the fees we receive for managing such products, by subsidizing expenses or by making seed capital investments. Seed investments in new products utilize Company capital that would otherwise be available for general corporate purposes and expose us to capital losses to the extent that realized investment losses are not offset by hedging gains. The risk of loss may be greater for seed capital investments that are not hedged, or if an intended hedge does not perform as expected. Failure to have or devote sufficient capital to support new products could have on adverse impact on our future growth.

~~Assets influenced by third-party intermediaries have a higher risk of redemption and are subject to changes in fee structures, which could reduce our revenues~~.

Investments in our mutual funds made through third-party intermediaries, as opposed to mutual fund investments resulting from sales by our own representatives can be more easily moved to investments in funds other than ours. Third-party intermediaries are attractive to investors because of the ease of accessibility to a variety of funds, but this causes the investments to be more sensitive to fluctuations in performance, especially in the short-term. If we were unable to retain the assets of our mutual funds held through third-party intermediaries, our AUM would be reduced. As a result, our revenues could decline and our business, results of operations and financial condition could be materially adversely affected.

We may elect to pursue growth in the United States and abroad through acquisitions or joint ventures, which would expose us to risks inherent in assimilating new operations, expanding into new jurisdictions, and making non-controlling minority investments in other entities.

In order to maintain and enhance our competitive position, we may review and pursue acquisition and joint venture opportunities. We cannot assure we will identify and consummate any such transactions on acceptable terms or have sufficient resources to accomplish such a strategy. Any strategic transaction can involve a number of risks, including:

~~additional demands on our staff;~~

~~unanticipated problems regarding integration of investor account and investment security recordkeeping, operating facilities and technologies, and new employees;~~

~~adverse effects in the event acquired intangible assets or goodwill become impaired;~~

~~the existence of liabilities or contingencies not disclosed to or otherwise known by us prior to closing such a transaction; and~~

~~dilution to our public stockholders if we issue shares of our~~repurchased Class A common ~~stock, or units of Manning & Napier Group with exchange rights, in connection with future acquisitions.~~shares as follows:

A portion of our separate account business, mutual funds, and collective investment trusts are distributed through intermediaries, platforms, and consultants. Changes in key distribution relationships could reduce our revenues and adversely affect our profitability.

Given that a portion of our product offerings are distributed through intermediaries, platforms, and investment consultants, a share of our success is dependent on access to these various distribution systems. These distributors are not contractually required to distribute or consider our products for placement within advisory programs, on platforms’ approved lists, or in active searches conducted by investment consultants. Additionally, these intermediaries typically offer their clients

various investment products and services, in addition to and in competition with our products and services. If we are unable to cultivate and build strong relationships within these distribution channels, the sales of our products could lead to a decline in revenues and profitability. Additionally, increasing competition for these distribution channels could cause our distribution costs to rise, which could have an adverse effect on our profitability.

~~Our efforts to establish new portfolios or new products or services may be unsuccessful and could negatively impact our results of operations and our reputation.~~

As part of our growth strategy, we may seek to take advantage of opportunities to develop new portfolios consistent with our philosophy of managing portfolios to meet our clients’ objectives and using a team-based investment approach. The initial costs associated with establishing a new portfolio likely will exceed the revenues that the portfolio generates. If any such new portfolio performs poorly or fails to attract sufficient assets to manage, our results of operations could be negatively impacted. Further, a new portfolio’s poor performance may negatively impact our reputation and the reputation of our other portfolios within the investment community. We have developed and may seek from time to time to develop new products and services to take advantage of opportunities involving technology, insurance, participant and plan sponsor education and other products beyond investment management. The development of these products and services could involve investment of financial and management resources and may not be successful in developing client relationships, which could have an adverse effect on our business. The cost to develop these products initially will likely exceed the revenue they generate and additional investment in these products could negatively impact short term financial results. If establishing new portfolios or offering new products or services requires hiring new personnel, to the extent we are unable to recruit and retain sufficient personnel, we may not be successful in further diversifying our portfolios, client assets and business, which could have an adverse effect on our business and future prospects.

Our failure to comply with investment guidelines set by our clients and limitations imposed by applicable law, could result in damage awards against us and a loss of our AUM, either of which could adversely affect our reputation, results of operations or financial condition.

When clients retain us to manage assets on their behalf, they generally specify certain guidelines regarding investment allocation that we are required to follow in managing their portfolios. We are also required to invest the mutual funds’ assets in accordance with limitations under the 1940 Act, and applicable provisions of the IRC. Other clients, such as plans subject to ERISA, or non-U.S. funds, require us to invest their assets in accordance with applicable law. Our failure to comply with any of these guidelines and other limitations could result in losses to clients or investors in our products which, depending on the circumstances, could result in our obligation to make clients whole for such losses. If we believed that the circumstances did not justify a reimbursement, or clients believed the reimbursement we offered was insufficient, clients could seek to recover damages from us, withdraw assets from our products or terminate their investment management agreement with us. Any of these events could harm our reputation and adversely affect our business.

~~A change of control of our company could result in termination of our investment advisory agreements.~~

Under the 1940 Act, each of the investment advisory agreements for SEC registered mutual funds that our affiliate, MNA, advises automatically terminates in the event of its assignment, as defined under the 1940 Act. If such an assignment were to occur, MNA could continue to act as adviser to any such fund only if that fund’s board of directors and stockholders approved a new investment advisory agreement, except in the case of certain of the funds that we sub-advise for which only board approval would be necessary. Under the Advisers Act each of the investment advisory agreements for the separate accounts we manage may not be assigned without the consent of the client. An assignment may occur under the 1940 Act and the Advisers Act if, among other things, MNA undergoes a change of control. In certain other cases, the investment advisory agreements for the separate accounts we manage require the consent of the client for any assignment. If such an assignment occurs, we cannot be certain that MNA will be able to obtain the necessary approvals from the boards and stockholders of the mutual funds that it advises or the necessary consents from separate account clients.

~~New Hampshire banking laws applicable to our trust company include change in control restrictions.~~

Our subsidiary, Exeter Trust Company (“ETC”), is established under the laws of New Hampshire. The New Hampshire Revised Statutes Annotated require that an application be filed with the Bank Commissioner for prior approval in the event of a change of ownership or a change of control. If any person intends to acquire directly or indirectly 10 percent or more of the voting shares of the Company, then a “change of ownership” of ETC will occur. Likewise, the direct or indirect transfer of ownership of more than 50 percent of the voting shares of the Company will result in a “change of control” of ETC. Approval of the application by the Bank Commissioner may take 90 days or longer.

~~Operational risks may disrupt our business, result in losses or limit our growth.~~

We are heavily dependent on the capacity and reliability of the communications, information and technology systems supporting our operations, whether developed, owned and operated by us or by third parties. Operational risks such as trading or operational errors or interruption of our financial, accounting, trading, compliance and other data processing systems,

whether caused by fire, natural disaster or pandemic, power or telecommunications failure, act of terrorism or war or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus adversely affect our business. Some types of operational risks, including, for example, trading errors, may be increased in periods of increased volatility, which can magnify the cost of an error. Although we have back-up systems in place, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate, and the fact that we operate our business out of multiple physical locations may make such failures and interruptions difficult to address on a timely and adequate basis.

We depend on our headquarters in Fairport, New York, where a majority of our employees, administration and technology resources are located, for the continued operation of our business. During the COVID-19 pandemic almost all of our employees are working remotely, which may impact the level of service that is provided to our clients. Any significant disruption to our headquarters could have an adverse effect on our business.

~~A failure to effectively maintain, enhance and modernize our information technology systems, and effectively develop and deploy new technologies, could adversely affect our business.~~

Our success depends on our ability to maintain effective information technology systems, to enhance those systems to better support our business in an efficient and cost-effective manner and to develop new technologies and capabilities in pursuit of our long-term strategy. We recently selected InvestCloud to lead our digital transformation, and will utilize InvestCloud's full suite of applications in order to deliver what we believe will be the best possible experience for our clients and partners. The multi-phased conversion will focus on enhancing the digital client experience, streamlining back-office processes, and centralizing performance data and reporting. Additionally, as part of the InvestCloud implementation, we will substantially re-engineer many of our business processes.

Some technology development initiatives are long-term in nature, may negatively impact our financial results as we invest in the initiatives, may cost more than anticipated to complete, or may not be completed. Additionally, our technology initiatives may be more costly or time-consuming than anticipated, may not deliver the expected benefits upon completion, and may need to be replaced or become obsolete more quickly than expected, which could result in accelerated recognition of expenses. If we fail to maintain or enhance our existing information technology systems or if we were to experience failure in developing and implementing new technologies, our relationships, reputation, ability to do business with our clients and our competitive position may be adversely affected. We could also experience other adverse consequences, including additional costs or write-offs of capitalized costs, unfavorable underwriting and reserving decisions, internal control deficiencies, and information security breaches resulting in loss or inappropriate disclosure of data. We have been required to make significant capital expenditures to update our technology infrastructure, and we may incur the costs described above as we deploy this new technology.

Failure to implement effective information and cyber security policies, procedures and capabilities, or cybersecurity breaches of software applications and other technologies on which we rely, could disrupt operations and cause financial losses that could result in a decrease in earnings and reputational harm.

We are dependent on the effectiveness of our, and third party software vendors', information and cybersecurity policies, procedures and capabilities to protect our computer and telecommunications systems and the data that reside on or are transmitted through them. As part of our normal operations, we maintain and transmit confidential information about our clients and employees as well as proprietary information relating to our business operations. We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent financial reporting and unauthorized access to sensitive or confidential data is either prevented or detected on a timely basis. Nevertheless, all technology systems remain vulnerable to unauthorized access and may be corrupted by cyberattacks, computer viruses or other malicious software code, the nature of which threats are constantly evolving and becoming increasingly sophisticated. In addition, we are currently facing heightened operational risk, including heighted cybersecurity risk, because more of our employees are working remotely. Remote working environments may be less secure and more susceptible to cyber-attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.

Breach or other failure of our technology systems, including those of third parties with which we do business, or failure to timely and effectively identify and respond to any such breach or failure, could result in the loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by the incident, additional security costs to mitigate against future incidents, increased insurance premiums, and litigation costs resulting from the incident. Moreover, loss of confidential customer information could harm our reputation, result in the termination of contracts by our existing customers and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues. Ultimately, a cyberattack can damage our competitiveness, stock price and long-term stockholder value. Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyberattacks, and may in the future result in heightened cybersecurity requirements, including additional regulatory expectations for oversight of vendors and service providers.

We depend on third-party service providers for services that are important to our business, and an interruption or cessation of such services by any such service providers could have an adverse effect on our business.

We depend on a number of service providers, including custodial and clearing firms, and vendors of communications and networking products and services. We cannot assure that these providers will be able to continue to provide these services in an efficient manner or that they will be able to adequately expand their services to meet our needs. An interruption or malfunction in or the cessation of an important service by any third-party and our inability to make alternative arrangements in a timely manner, or at all, could have an adverse impact on our business, financial condition and operating results.

~~Employee misconduct could expose us to significant legal liability and reputational harm.~~

We operate in an industry in which integrity and the confidence of our clients are of critical importance. Accordingly, if any of our employees engage in illegal or suspicious activities or other misconduct, we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial condition, client relationships and ability to attract new clients. For example, our business often requires that we deal with confidential information. If our employees were to improperly use or disclose this information, even if inadvertently, we could suffer serious harm to our reputation, financial condition and current and future business relationships. It is not always possible to deter employee misconduct, and the precautions we take to detect and prevent this activity may not always be effective. Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in an adverse effect on our reputation and our business.

~~Failure to properly address conflicts of interest could harm our reputation, business and results of operations.~~

We must monitor and address any conflicts between our interests and those of our clients. The SEC and other regulators scrutinize potential conflicts of interest, and we have implemented procedures and controls that we believe are reasonably designed to address these issues. However, appropriately dealing with conflicts of interest is complex, and if we fail, or appear to fail, to deal appropriately with conflicts of interest, we could face reputational damage, litigation or regulatory proceedings or penalties, any of which could adversely affect our reputation, business and results of operations.

~~If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.~~

In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to operational, legal and reputational risks. Our risk management methods may prove to be ineffective due to their design or implementation, or as a result of the lack of adequate, accurate or timely information or otherwise. If our risk management efforts are ineffective, we could suffer losses that could have an adverse effect on our financial condition or operating results. Additionally, we could be subject to litigation, particularly from our clients, and sanctions or fines from regulators. Our techniques for managing risks in client portfolios may not fully mitigate the risk exposure in all economic or market environments, or against all types of risk, including risks that we might fail to identify or anticipate.


Period	Total Number of Shares Purchased	Average Price Paid Per Share (in dollars)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - 31, 2021	—	$	—	—	$	—
February 1 - 28, 2021	52,570	$	7.15	52,570	$	9,620,485
March 1 - 31, 2021	359,835	$	7.27	359,835	$	7,012,781
Total	412,405	$	7.24	412,405	$	7,012,781

The ~~cost of insuring our business is substantial and may increase.~~repurchase program will expire on December 31, 2021.

While we carry insurance in amounts and under terms that we believe are appropriate, we cannot guarantee that our insurance will cover all liabilities and losses to which we may be exposed or, if covered, that such liabilities and losses will not exceed the limits of available insurance coverage, or that our insurers will remain solvent and meet their obligations. We cannot guarantee that our insurance policies will continue to be available at current terms and fees.

We believe our insurance costs are reasonable but they could fluctuate significantly from year to year. Certain insurance coverage may not be available or may only be available at prohibitive costs. As we renew our insurance policies, we may be subject to additional costs resulting from rising premiums, the assumption of higher deductibles or co-insurance liability and, to the extent certain of our mutual funds purchase separate director and officer or errors and omissions liability coverage, an increased risk of insurance companies disputing responsibility for joint claims. Higher insurance costs and incurred deductibles, as with any expense, would reduce our net income.

~~Risks Related to our Industry~~

~~We are subject to extensive regulation.~~

We are subject to extensive regulation for our investment management business and operations, including regulation by the SEC under the 1940 Act and the Advisers Act, by the U.S. Department of Labor under ERISA, and by FINRA. The U.S. mutual funds we advise are registered with and regulated by the SEC as investment companies under the 1940 Act. The Advisers Act imposes numerous obligations on investment advisers including record keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities. The 1940 Act imposes similar obligations, as well as additional detailed operational requirements, on registered investment companies, which must be adhered to by their investment advisers. The U.S. mutual funds that we advise and our broker-dealer subsidiary are each subject to the USA PATRIOT Act of 2001, which requires them to know certain information about their clients and to monitor their transactions for

suspicious financial activities, including money laundering. The U.S. Office of Foreign Assets Control, ("OFAC"), has issued regulations requiring that we refrain from doing business, or allow our clients to do business through us, in certain countries or with certain organizations or individuals on a list maintained by the U.S. government.

Our failure to comply with applicable laws or regulations could result in fines, censure, suspensions of personnel or other sanctions, including revocation of our registration as an investment adviser. Even if a sanction imposed against us or our personnel is small in monetary amount, the adverse publicity arising from the imposition of sanctions against us by regulators could harm our reputation, result in withdrawal by our clients from our products and impede our ability to retain clients and develop new client relationships, which may reduce our revenues.

We face the risk of significant intervention by regulatory authorities, including extended investigation and surveillance activity, adoption of costly or restrictive new regulations and judicial or administrative proceedings that may result in substantial penalties. Among other things, we could be fined or be prohibited from engaging in some of our business activities. The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us, and are not designed to protect our stockholders. Accordingly, these regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements.

~~The regulatory environment in which we and our clients operate is subject to continual change, and regulatory developments designed to increase oversight could adversely affect our business.~~

The legislative and regulatory environment in which we operate undergoes continuous change, subjecting industry participants to additional, more costly and potentially more punitive regulation. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients could adversely affect our business subjecting us and other industry participants to additional costs. Any or all of the regulators who oversee us could adopt new rules or rule amendments that could substantially impact how we operate and may necessitate significant expenditures in order to adapt and comply.

Our ability to function in an uncertain and ever-changing regulatory environment will depend on our ability to constantly monitor and promptly react to legislative and regulatory changes, which inevitably result in intangible costs and resource drains. The compliance burden resulting from regulatory changes and uncertainty is likely to increase, particularly as regulators grow more technologically advanced and more reliant on data analytics. As a result, we may be forced to divert resources and expenditures to information technology in order to analyze data and risk in the same manner as regulators and to be able to provide regulators with the data output they may expect going forward.

Regulations may accelerate industry trends towards passive or lower cost investment options, centralized due diligence and shrinking platform ability, making access to intermediary decision-makers more challenging. Mutual fund intermediaries may be forced to eliminate or curtail the availability of certain mutual fund share classes, which may hamper our distribution efforts and reduce assets in the mutual fund. Similarly, platform consolidations may prevent our separate account intermediaries from supporting our products, which could result in AUM declines and fewer distribution channels.

There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries have resulted in increased scrutiny of the industry and new rules and regulations for mutual funds and investment managers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders. Further, adverse results of regulatory investigations of mutual fund, investment advisory and financial services firms could tarnish the reputation of the financial services industry generally and mutual funds and investment advisers more specifically, causing investors to avoid further fund investments or redeem their account balances. Redemptions would decrease our AUM, which would reduce our advisory revenues and net income.

Further, due to acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may continue to increase regulatory oversight of our business.

~~The investment management industry is intensely competitive.~~

The investment management industry is intensely competitive, with competition based on a variety of factors, including investment performance, investment management fee rates, recent trend towards favor for passive investment products, continuity of investment professionals and client relationships, the quality of services provided to clients, corporate positioning and business reputation, continuity of selling arrangements with intermediaries and differentiated products. A number of factors, including the following, serve to increase our competitive risks:

~~some competitors, including those with passive investment products and exchange traded funds, charge lower fees for their investment services than we do;~~

~~a number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do;~~

~~potential competitors have a relatively low cost of entering the investment management industry;~~

~~the recent trend toward consolidation in the investment management industry, and the securities business in general, has served to increase the size and strength of a number of our competitors;~~

some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly traded asset manager may focus on the manager’s own growth to the detriment of investment performance for clients;

~~some competitors may invest according to different investment styles or in alternative asset classes that the markets may perceive as more attractive than the portfolios we offer;~~

~~some competitors may have more attractive investment returns;~~

some competitors may operate in a different regulatory environment than we do, which may give them certain competitive advantages in the investment products and portfolio structures that they offer; and

~~other industry participants, hedge funds and alternative asset managers may seek to recruit our investment professionals.~~

~~If we are unable to compete effectively, our revenues could be reduced and our business could be adversely affected.~~

~~Our industry is increasingly becoming subject to rapid changes in technology that may alter historical methods of doing business.~~

The financial industry continues to be impacted by innovation, technological changes, and changing customer preferences, including the emergence of “FinTech” companies and the deployment of new technologies based on artificial intelligence and machine learning that are becoming increasing competitive with and may disrupt more traditional business models. If we do not effectively anticipate and adapt to these changes it could limit our ability to compete, decrease the value of our products to clients, and adversely affect our business and results of operations.

Our business could also be affected by technological changes in the industries that represent our target markets, including tasks/roles that are currently performed by people being replaced by automation, artificial intelligence, or other advances outside of our control, which could impact national brokerage firm representatives or independent financial advisors, upon which a portion of our revenues are based, and adversely affect our business and results of operations.

The investment management industry faces substantial litigation risks, which could adversely affect our business, financial condition or results of operations or cause significant reputational harm to us.

We depend to a large extent on our network of relationships and on our reputation to attract and retain client assets. If a client is not satisfied with our services, its dissatisfaction may be more damaging to our business than client dissatisfaction would be to other types of businesses. We make investment decisions on behalf of our clients that could result in substantial losses to them. If our clients suffer significant losses, or are otherwise dissatisfied with our services, we could be subject to the risk of legal liabilities or actions alleging negligent misconduct, breach of fiduciary duty, breach of contract, unjust enrichment and/or fraud. These risks are often difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time, even after an action has been commenced. We may incur significant legal expenses in defending against litigation whether or not we engaged in conduct as a result of which we might be subject to legal liability. Substantial legal liability or significant regulatory action against us could adversely affect our business, financial condition or results of operations or cause significant reputational harm to us.

~~Catastrophic and unpredictable events, like the COVID-19 pandemic, could have an adverse effect on our business.~~

The COVID-19 pandemic and any terrorist attack, war, power failure, cyber-attack, natural disaster, public health emergency or pandemic or other catastrophic or unpredictable event could adversely affect our future revenues, expenses and earnings by:

~~decreasing investment valuations in, and returns on, the assets that we manage;~~

~~causing disruptions in national or global economies that decrease investor confidence and make investment products generally less attractive;~~

~~interrupting our normal business operations;~~

~~sustaining employee casualties, including loss of our key members of our senior management team or our investment team;~~

~~requiring substantial expenditures and expenses to repair, replace and restore normal business operations; and~~

~~reducing investor confidence.~~

We have a disaster recovery plan to address certain contingencies, but we cannot be assured that this plan will be sufficient in responding or ameliorating the effects of all disaster scenarios. If our employees or the vendors we rely upon for

~~support in a catastrophic event are unable to respond adequately or in a timely manner, we may lose clients resulting in a decrease in AUM which may have an adverse effect on revenues and net income.~~

~~Risks Related to Our Structure~~

We may not be able to resume paying dividends on our Class A common stock, and our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our structure and applicable provisions of Delaware law.

On April 22, 2020, our board of directors determined to suspend our quarterly cash dividend on our Class A common stock due to the market volatility and ongoing uncertainty resulting from the COVID-19 pandemic. Although we had historically declared cash dividends on our Class A common stock, our board of directors has sole discretion over the amount or frequency of any dividends. Because of our structure, we will be dependent upon the ability of our subsidiaries to generate earnings and cash flows and distribute them to us so that we may pay dividends, if declared by the board of directors, to our stockholders. Manning & Napier Group’s ability to make distributions to its members, including us, in an amount sufficient for us to pay dividends, if any, will be subject to its and its subsidiaries’ operating results, cash requirements and financial condition, the applicable laws of the State of Delaware, which may limit the amount of funds available for distribution, and its compliance with covenants and financial ratios related to any indebtedness it may incur in the future. In addition, as described elsewhere, under the terms of its operating agreement, Manning & Napier Group is obligated to make tax distributions to holders of its units, including us. As a consequence of these various limitations and restrictions, we may have to reduce or eliminate the payment of dividends on our Class A common stock for an extended period of time, which could adversely affect the market price of our Class A common stock.

We depend on distributions from Manning & Napier Group to pay taxes and expenses, including payments under the tax receivable agreement, but Manning & Napier Group’s ability to make such distributions will be subject to various limitations and restrictions.

We have no material assets other than our ownership of Class A units of Manning & Napier Group and have no independent means of generating revenue. Manning & Napier Group is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, taxable income is allocated to holders of its units, including us. Accordingly, we incur income taxes on our allocable share of any net taxable income of Manning & Napier Group. Under the terms of its operating agreement, Manning & Napier Group is obligated to make tax distributions to holders of its units, including us. We also incur expenses related to our operations, including expenses under the tax receivable agreement, which we expect to be significant. We intend, as its managing member, to cause Manning & Napier Group to make distributions in an amount sufficient to allow us to pay our taxes and operating expenses, including any payments due under the tax receivable agreement. However, Manning & Napier Group’s ability to make such distributions is subject to various limitations and restrictions including, but not limited to, restrictions on distributions that would violate any contract or agreement to which Manning & Napier Group is then a party or any applicable law or that would have the effect of rendering Manning & Napier Group insolvent. If we do not have sufficient funds to pay tax or other liabilities to fund our operations, we may have to borrow funds, which could adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders.

Furthermore, by paying cash distributions rather than investing in our business, we might not have sufficient cash to fund operations or new growth initiatives that will support the growth of our business.

We are required to pay holders of units of Manning & Napier Group for certain tax benefits we may claim as a result of the tax basis step up we realize in connection with the future purchases or exchanges of those units for shares of our Class A common stock, and the amounts we may pay could be significant.

Our current and former employee owners indirectly hold a minority ownership interest in Manning & Napier Group. Any future purchases or exchanges of their units of Manning & Napier Group for cash or, at our election, shares of our Class A common stock may produce favorable tax attributes for us. When we acquire such units, both the existing basis and the anticipated basis adjustments may increase, for tax purposes, depreciation and amortization deductions allocable to us from Manning & Napier Group and therefore reduce the amount of income tax we would otherwise be required to pay in the future. This increase in tax basis may also decrease gain, or increase loss, on future dispositions of certain capital assets to the extent the increased tax basis is allocated to those capital assets.

We entered into a tax receivable agreement with the other holders of Class A units of Manning & Napier Group, pursuant to which we are required to pay to holders of such Class A units 85% of the applicable cash savings, if any, in U.S. federal, state, local and foreign income tax that we actually realize, or are deemed to realize in certain circumstances, as a result of any step-up in tax basis in Manning & Napier Group’s assets as a result of (i) certain tax attributes of our purchase of such Class A units or exchanges (for shares of Class A common stock) and that are created as a result of the sales or exchanges and payments

~~under the tax receivable agreement and (ii) payments under the tax receivable agreement, including any tax benefits related to imputed interest deemed to be paid by us as a result of such agreement.~~

We expect that the payments we will be required to make under the tax receivable agreement will be substantial. We have recorded the estimated impacts of the Tax Cuts and Jobs Act and the CARES Act on the liability under the tax receivable agreement. Assuming no new material changes in the relevant tax law, the purchase or exchange of Class A units would result in depreciable or amortizable basis and that we earn sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreement, we expect that the reduction in tax payments for us is approximately $22.5 million as of September 30, 2020. Under such scenario, we would be required to pay the holders of such Class A units 85% of such amount, or approximately $19.4 million. The actual amounts may materially differ from these estimated amounts, as potential future reductions in tax payments for us and tax receivable agreement payments by us will be calculated using the market value of our Class A common stock and the prevailing tax rates at the time of purchase or exchange and will be dependent on us generating sufficient future taxable income to realize the benefit. In general, increases in the market value of our shares or in prevailing tax rates will increase the amounts we pay under the tax receivable agreement.

~~The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including:~~

the timing of exchanges by the holders of units of Manning & Napier Group, the number of units purchased or exchanged, or the price of our Class A common stock, as the case may be, at the time of the purchase or exchange;

~~the amount and timing of the taxable income we generate in the future and the tax rate then applicable; and~~

~~the portion of our payments under the tax receivable agreement constituting imputed interest and whether the purchases or exchanges result in depreciable or amortizable basis.~~

There is a possibility that not all of the 85% of the applicable cash savings will be paid to the selling or exchanging holder of Class A units at the time described above. If we determine that all or a portion of such applicable tax savings is in doubt, we will pay to the holders of such Class A units the amount attributable to the portion of the applicable tax savings that we determine is not in doubt and pay the remainder at such time as we determine the actual tax savings or that the amount is no longer in doubt.

Payments under the tax receivable agreement, if any, will be made pro rata among all tax receivable agreement holders entitled to payments on an annual basis to the extent we have sufficient taxable income to utilize the increased depreciation and amortization expense. The availability of sufficient taxable income to utilize the increased depreciation and amortization expense will not be determined until such time as the financial results for the year in question are known and tax estimates prepared. To the extent that we are unable to make payments under the tax receivable agreement for any reason, such payments will be deferred and in some instances, will accrue interest until paid.

In certain cases, payments under the tax receivable agreement to holders of Manning & Napier Group units may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement.

The tax receivable agreement provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, or if, at any time, we elect an early termination of the tax receivable agreement, our obligations under the tax receivable agreement with respect to all Class A units of Manning & Napier Group, whether or not such units have been purchased or exchanged before or after such transaction, would be based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement. As a result, (i) we could be required to make payments under the tax receivable agreement that are greater than or less than the specified percentage of the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement and (ii) if we elect to terminate the tax receivable agreement early, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits, which payment may be made significantly in advance of the actual realization of such future benefits. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to finance our obligations under the tax receivable agreement. If we were to elect to terminate the tax receivable agreement immediately as of September 30, 2020, we estimate that we would be required to pay up to approximately $20.3 million in the aggregate, which assumes the exchange of 2,021,781 units of Manning & Napier Group held by those other than us under the tax receivable agreement.

If we were deemed an investment company under the 1940 Act as a result of our ownership of Manning & Napier Group, applicable restrictions could make it impractical for us to continue our business as contemplated and could have an adverse effect on our business.

We do not believe that we are an “investment company” under the 1940 Act. Because we, as the sole managing member of Manning & Napier Group, control the management of and operations of Manning & Napier Group, we believe that our interest in Manning & Napier Group is not an “investment security” as such term is used in the 1940 Act. If we were to cease participation in the management of Manning & Napier Group or not be deemed to control Manning & Napier Group, our interest in Manning & Napier Group could be deemed an “investment security” for purposes of the 1940 Act. A person may be an “investment company” if it owns investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items). Our sole asset is our equity investment in Manning & Napier Group. A determination that such investment is an investment security could cause us to be deemed an investment company under the 1940 Act and to become subject to the registration and other requirements of the 1940 Act. We do not believe that we are an investment company under Section 3(b)(1) of the 1940 Act because we are not primarily engaged in a business that causes us to fall within the definition of “investment company.” The 1940 Act and the rules thereunder contain detailed prescriptions for the organization and operations of investment companies. Among other things, the 1940 Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, prohibit the issuance of stock options, and impose certain governance requirements. We and Manning & Napier Group intend to conduct our operations so that we will not be deemed an investment company. However, if we nevertheless were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have an adverse effect on our business, financial condition and results of operations.

~~Risks Related to Our Class A Common Stock~~

~~The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders.~~

The market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. The trading volume of our Class A common stock may fluctuate and cause significant price variations to occur. If the market price of our Class A common stock declines significantly, investors may be unable to sell shares of Class A common stock at or above their purchase price, if at all. The market price of our Class A common stock may fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our Class A common stock, or result in fluctuations in the price or trading volume of our Class A common stock, include:

~~an extended period of U.S. economic hardship as a result of the COVID-19 pandemic;~~

~~actual or anticipated variations in our quarterly operating results, including the suspension of our quarterly dividend;~~

~~failure to meet the market’s earnings expectations;~~

~~publication of negative research reports about us or the investment management industry, or the failure of securities analysts to cover our Class A common stock;~~

~~a limited float and low average daily trading volume, which may result in illiquidity as investors try to buy and sell and thereby exacerbating positive or negative pressure on our stock;~~

~~departures of any members of our senior management team or additions or departures of other key personnel;~~

~~adverse market reaction to any indebtedness we may incur or securities we may issue in the future;~~

~~adverse market reaction to our stockholder rights, or "poison pill," plan;~~

~~changes in market valuations of similar companies;~~

~~actual or anticipated poor performance in one or more of the portfolios we offer;~~

changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting our business, or enforcement of these laws and regulations, or announcements relating to these matters;

~~adverse publicity about the investment management industry generally, or particular scandals, specifically;~~

~~litigation and governmental investigations;~~

~~consummation by us or our competitors of significant acquisitions, strategic partnerships or divestitures;~~

~~actions by stockholders, including any activist stockholders;~~

~~exchange of units of Manning & Napier Group for shares of our Class A common stock or the expectation that such conversions or exchanges may occur; and~~

~~general market and economic conditions.~~

Our Class A common stockholders may experience dilution in the future as a result of future acquisitions, additional capital raising, exchanges pursuant to the Exchange Agreement and/or equity grants under our equity compensation plans.

If we issue shares of Class A common stock or units of Manning & Napier Group in future acquisitions or capital raising activity, the ownership interest of our Class A common stockholders will be diluted. If we grant exchange rights with respect to the issuance of the units of Manning & Napier Group that allow its holder to exchange such units for shares of our Class A common stock, stockholders will incur dilution in the percentage of the issued and outstanding shares of Class A common stock that are owned at such time. Our stockholders will also be diluted to the extent the current holders of Class A units of Manning & Napier Group exchange their units pursuant to the Exchange Agreement and we settle that exchange in shares of our Class A common stock. We also may issue shares of our Class A common stock or units of Manning & Napier Group in connection with grants under our equity compensation plans, which will dilute our Class A common stockholders. Any such future sales, issuances or exchanges of our Class A common stock or rights to purchase our Class A common stock could result in substantial dilution to our existing stockholders.

If we fail to comply with our public company financial reporting and other regulatory obligations, including the Continued Listing Criteria of the New York Stock Exchange, our business and stock price could be adversely affected.

We are subject to the Continued Listing Criteria of the New York Stock Exchange (“NYSE”). In order for our Class A common stock to continue trading on the NYSE, we must maintain certain share prices, numbers of stockholders and corporate governance standards, including obtaining the approval of our stockholders prior to issuing shares in excess of 20% of the voting power outstanding before that issuance. If we are unable to meet any of these standards, our Class A common stock may no longer trade on the NYSE, which would adversely impact the trading market for our shares and liquidity for our stockholders and may adversely impact our business. If our Class A common stock does not maintain an average closing price of $1.00 or more over any consecutive 30 trading-day period, the NYSE may delist our Class A common stock for failure to maintain compliance with the NYSE price criteria listing standards. Specifically, in the event that our stock price falls below the minimum share price, we may fall out of compliance with the NYSE listing standards and to regain compliance we may be forced to take corporate actions, such as a reverse stock split, which may adversely impact the trading market for our shares and liquidity. As a public company, we are subject to the reporting requirements of the Exchange Act, have implemented specific corporate governance practices and adhere to a variety of reporting requirements under the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, as well as the rules of the NYSE.

Our management is required to conduct an annual assessment of the effectiveness of our internal controls over financial reporting and include a report on our internal controls in our annual reports on Form 10-K pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. If our management identifies one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. If we are unable to assert that our internal control over financial reporting is effective, market perception of our financial condition and the trading price of our stock may be adversely affected and customer perception of our business may suffer.

Our corporate documents, stockholder rights plan and Delaware law contain provisions that could discourage, delay or prevent a change in control of the Company that our stockholders might consider to be in their best interests.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as our stockholder rights, or “poison pill,” plan, could impede attempts by our stockholders to remove or replace our management and could discourage others from initiating a potential merger, takeover or other change of control transaction, including a potential transaction at a premium over the market price of our Class A common stock, that our stockholders might consider to be in their best interests. These provisions:

authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of our Class A common stock;

discourage any person or group that wishes to acquire 15% or more of our Class A common stock from doing so without obtaining our agreement because such an acquisition would cause the person or group to suffer substantial dilution;

~~prohibit stockholder action by written consent and instead require all stockholder actions to be taken at a meeting of our stockholders;~~

~~provide that the board of directors is expressly authorized to make, alter, or repeal our amended and restated bylaws; and~~

~~establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.~~

These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, even if doing so would benefit the holders of our Class A common stock.

~~A proxy contest for the election of directors at our annual meeting or proposals arising out of stockholder initiatives could cause us to incur substantial costs and negatively affect our business.~~

Due to the uncertainty in U.S. financial markets as a result of the COVID-19 pandemic in combination with the recent redemption pursuant to our annual exchange process, we may be subject to proxy contests and other forms of stockholder activism. In the event that any significant investor makes proposals concerning our operations, governance or other matters, or seeks to change our board of directors, our review and consideration of such proposals may require the devotion of a significant amount of time by our management and employees and could require us to expend significant resources. Further, if our board of directors, in exercising its fiduciary duties, disagrees with or determines not to pursue the strategic direction suggested by an activist stockholder, our business could be adversely affected by responding to a costly and time-consuming proxy contest or other actions from an activist stockholder that will divert the attention of our management and employees, interfere with our ability to execute our strategic plan, result in the loss of business opportunities and clients, and make it more difficult for us to attract and retain qualified personnel and business partners.

Any issuance of preferred stock could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.

Our board of directors has the authority to issue preferred stock and to determine the preferences, limitations and relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our Class A common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discouraging bids for our Class A common stock at a premium over the market price, and adversely affect the market price and the voting and other rights of the holders of our Class A common stock.

~~If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.~~

The trading market for our Class A common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

Item 5. Other Information

Effective October 20, 2020, the Board of Directors adopted a Director Resignation Policy (the “Resignation Policy”). Under the Resignation Policy, in an uncontested election of directors, director nominees who receive a greater number of votes withheld from their election than for their election must tender their resignation to the chairman of the Board within five business days of when the stockholder vote is certified.

Under the Resignation Policy, the Nominating and Corporate Governance Committee of the Board of Directors (the “NCGC”) will consider the tendered resignation and recommend to the Board of Directors whether to accept or reject the resignation within 45 calendar days of the stockholder meeting. The Resignation Policy requires the Board of Directors to act on the NCGC’s recommendation within 120 calendar days of the stockholder meeting. Following the decision of the Board of Directors,On March 23, 2021, the Company ~~will promptly file~~filed a Current Report on Form 8-K ~~with~~disclosing that the ~~SEC~~Company would settle the approximately 1.6 million units of Manning & Napier Group, LLC, tendered for exchange by certain legacy owners, in approximately 1.6 million shares of unregistered Class A Common Stock of the Company. The closing of such transaction was previously reported to ~~announce~~occur on or before May 15, 2021. The Company continues to work diligently to close the ~~decision~~transaction expeditiously and ~~if applicable, the factors considered in determining whether~~expects such closing to ~~accept or reject the resignation.~~

~~The Resignation Policy prohibits any director who is required to tender his or her resignation from participating~~occur later in the NCGC’s recommendation or the Board’s determination on the director’s tendered resignation, and it provides for processes in the event the chairman, a majority of the members of the NCGC or all directors are required to tender their resignation. A copy of the Resignation Policy can be found under the “Investor Relations-Governance” section of the Company’s website at www.manning-napier.com. The contents of the Company’s website are not incorporated by reference into this Quarterly Report on Form 10-Q.year.

Item 6. Exhibits



Exhibit No.		Description
~~3.1~~31.1		Amended and Restated Bylaws of Manning & Napier, Inc., as of July 26, 2020 is incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 30, 2020

~~31.1~~	Certification of the Company’s Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the Company’s Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		Materials from the Manning & Napier, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2020,~~March 31, 2021, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) related Notes to the Unaudited Consolidated Financial Statements.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MANNING & NAPIER, INC.

Dated: ~~November 16, 2020~~May 14, 2021

By:

/s/ Marc Mayer

Marc Mayer

Chief Executive Officer

(principal executive officer)

/s/ Paul J. Battaglia

Paul J. Battaglia

Chief Financial Officer

(principal financial and accounting officer)



	Three Months Ended March 31, 2019			Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
	(in thousands)
Wealth Management Revenue, as previously reported	$	16,469		$	16,209		$	32,678
Adjustments	(1,996		)	(1,950		)	(3,946		)
Wealth Management Revenue, as revised	$	14,473		$	14,259		$	28,732

Institutional and Intermediary Revenue, as previously reported	$	13,234		$	12,932		$	26,166
Adjustments	1,996			1,950			3,946
Institutional and Intermediary Revenue, as revised	$	15,230		$	14,882		$	30,112

	Three Months Ended March 31, 2020			Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
	(in thousands)
Wealth Management Revenue, as previously reported	$	14,300		$	13,740		$	28,040
Adjustments	(280		)	(169		)	(449		)
Wealth Management Revenue, as revised	$	14,020		$	13,571		$	27,591

Institutional and Intermediary Revenue, as previously reported	$	12,131		$	12,142		$	24,273
Adjustments	280			169			449
Institutional and Intermediary Revenue, as revised	$	12,411		$	12,311		$	24,722



	Three months ended September 30, 2020						Three months ended September 30, 2019
	Wealth Management		Institutional and Intermediary		Total		Wealth Management		Institutional and Intermediary		Total
	(in thousands)
Blended Asset	$	12,117	$	8,261	$	20,378	$	12,397	$	8,466	$	20,863
Equity	1,450		4,892		6,342		1,580		5,967		7,547
Fixed Income	176		381		557		204		382		586
Total	$	13,743	$	13,534	$	27,277	$	14,181	$	14,815	$	28,996



	Nine months ended September 30, 2020						Nine months ended September 30, 2019
	Wealth Management		Institutional and Intermediary		Total		Wealth Management		Institutional and Intermediary		Total
	(in thousands)
Blended Asset	$	36,044	$	24,096	$	60,140	$	37,065	$	25,917	$	62,982
Equity	4,800		13,141		17,941		5,218		17,760		22,978
Fixed Income	491		1,018		1,509		630		1,250		1,880
Total	$	41,335	$	38,255	$	79,590	$	42,913	$	44,927	$	87,840



	Stock Awards		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020	1,037,901		$	4.30
Granted	2,997,940		$	1.58
Vested	(444,165	)	$	4.55
Forfeited	(28,983	)	$	1.58
Outstanding at September 30, 2020	3,562,693		$	2.01