Manning & Napier, Inc. Class A

We appreciate your patience and ask that you please continue to stand by. Thank you. To all sites on hold, we appreciate your patience and ask that you please continue to stand by. Thank you. To all sites on hold, we appreciate your patience and ask that you please continue to stand by. Your program will begin momentarily. Good evening. My name is Brittany and I will be your conference operator today. At this time, I would like to welcome everyone to the Manning and Appear Third Quarter 2021 Earnings Conference Call. Our hosts for today's call are Nicole Kinsley Bruner, Chief Marketing and Strategy Officer, Mark Mayer, Chairman and Chief Executive Officer, and Paul Pataglia, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 8 p.m. Eastern Standard Time today. The dial-in number is 800-839-5629. No passcode is required. At this time, all participants have been placed in a listen-only mode. If you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Ms. Nicole Kingsley Bruner.

Thank you, Brittany, and thank you, everyone, for joining us today to discuss Manning and Appear's third quarter 2021 results. Before we begin, I would like to remind everyone that certain statements made during this call, not based on historical facts, including any statements relating to financial guidance, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Manning and Appear assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include reference to non-GAAP financial measures. Full GAAP reconciliations can be found in our earnings release and related SEC filings. With that, I will turn the call over to our Chief Executive Officer, Mark Mayer. Mark?

Thank you, Nicole. We continue to execute on our investment disciplines this quarter, helping clients stay on track towards meeting their objectives. while we made further progress on our strategic initiatives. Our performance for clients was muted for the quarter. The quarter saw flattish to negative absolute returns across much of the equity universe and flat returns in fixed income. While the S&P 500 rose slightly for the quarter, less than 1%, the broader U.S. equity market was roughly flat, and equities outside the U.S. declined. Our relative performance was mixed, as a somewhat higher percentage of our strategies underperformed, though generally by very small amounts, than outperformed. Most of the figures we will discuss are available on pages six and seven of the earnings supplement. In our multi-asset class strategies, which represent two-thirds of our AUM, we delivered slightly negative absolute results over the period across all our risk profiles, in all cases broadly consistent with though very slightly, as in tens of basis points, behind the subdued returns in global capital markets during the quarter. All our multi-asset portfolios are ahead of their benchmarks for the year to date, and three- and five-year relative returns remain compelling. This was the first quarter since the pandemic began where broad financial market performance, as well as our own multi-asset class results, were subpar. From the market bottom in late March of last year, global equities had been on a steady, consistent run as economies have recovered and persistently low bond yields have provided some justification for multiple expansion. This equity strength has more than made up the weak bond market performance over that stretch, and our investment teams have capitalized on this environment. In the third quarter, however, both equities and debt markets stalled out. To state the obvious, we are living through a remarkable economic event. The U.S. recovery from last spring's deaths has been so rapid and so strong that we believe the domestic economy is rapidly moving through its economic cycle and is already in a mid-cycle phase, with some signs even pointing towards a later cycle stage. Although there are economic indicators suggesting that there remains some residual slack in the system, weak labor force participation, for example. Numerous other indicators, including healthy consumer demand, supply chain constraints everywhere, rising commodity prices, and the unmistakable uptick inflation are quite extraordinary to see only one and a half years removed from the sharpest economic contraction in American history. To be clear, economic and company fundamentals remain robust at this time, but financial market valuations are elevated, and the rapidly accelerating U.S. economic cycle suggests that systematic risks have begun to build. Our long-term outlook for economic growth is still characterized by certain structural headwinds, such as deteriorating demographics and rapidly rising debt levels. As a result of our evolving views, we began to reduce risk in our multi-asset class portfolios during the third quarter. As we saw last year, our bottom-up research team is agile and can move quickly when they see opportunities emerge, and there are certainly compelling investments around the world. However, at our current positioning, for equity markets to go on a tear, it is unlikely we would deliver better performance than our multi-asset class benchmarks. As noted, fixed income returns were muted in the quarter. Our aggregate fixed income composite performed in line with its benchmark, while our tax-exempt portfolios declined and underperformed very slightly. The bright spot in fixed income markets remains high yields, up about 1% for the quarter, and our high-yield fund continued to outperform as it has all year and over the longer term. This Morningstar five-star fund ranks in the top decile of its peer group over one, three, five, and 10 years. Its inclusion in our multi-asset class portfolios has been additive, and we are seeing interest from third-party advisors. In an environment of such high risk and fixed income, Characterized by sharply negative real rates and tight credit spreads, how has our credit team been able to add value in high yields? Well, because of our lesser size, we can identify smaller, often unrated bonds that larger investors simply ignore. These credits require substantial research and have contributed to our strong results. Our unconstrained bond series is similarly capitalizing on our flexible, truly active approach. The strategy's goal is to deliver maximum absolute returns with the least amount of risk, and we believe the team is excelling, having provided total returns of 492 and 356 basis points annualized over the past three and five years, respectively. Results were mixed for our fundamental bottom-up equity portfolios. Our U.S. core equity composite underperformed slightly, but remains about 100 basis points ahead for the year to date. Our core equity unrestricted and global equity strategies both outperformed for the quarter. Global equity is 287 basis points ahead for the year. The standout, again, was the core non-U.S. equity strategies. Our international equity composite provided 192 basis points of outperformance in a negative return environment this quarter, bolstering the year-to-date outperformance to nearly 700 basis points. On a three- and five-year rolling basis, the composite is outperforming by 713 and 309 basis points annualized, respectively, and it remains well ahead of benchmark over the past 10 and 20 years. Our real estate series bounced back with a strong quarter, outperforming its MSCI U.S. REIT benchmark by over 200 basis points. It is now ahead of its benchmark for the year and is well ahead over three, five, and ten years. REITs have been a bright spot among equities all year, consistent with economic recovery. We believe our strategy is particularly compelling for its consistent emphasis on quality. Our Rainier International small cap strategy underperformed slightly versus a flat benchmark and remains behind for the year. Outperformance over three and five years remains outstanding for Rainier at 557 and 485 basis points, respectively. Our discipline value series modestly underperformed as the strategy's bias to quality within the value style was again a headwind. While investment results overall were muted for this quarter, we are proud of what our investment team has delivered for clients, both recently and over the longer term. We were named Barron's best actively managed fund family for 2020 for a reason, and we look forward to delivering excellent investment results and well-architected solutions to clients in the years ahead. I'd like to now turn to progress on our key strategic initiatives. Net flows remain slightly negative. While we are seeing continued reductions in the rate of outflows, improving gross and net flows in our intermediary business are more than offset by small declines in our institutional and wealth management businesses. As noted last quarter, we made important management changes to accelerate the progress in our sales organizations, and we are just beginning to see the fruits of those management changes. The results of our actions and investments lead us to target modestly positive net flows in 2022. In prior quarters, we said that our most performance-sensitive business, the intermediary channel, was the one most likely to see acceleration in the short term, reflecting our strong investment results. This has occurred. We are investing in this channel, hiring new advisor consultants who come to us with significant experience and strong relationships with third-party advisors. We are leveraging our positive press, such as Lipper Awards, and we are seeing good sales momentum across our strategies, multi-asset class strategies, Rainier, international small cap, high yield, and international equity in particular. Our intermediary channel has had positive net flows each quarter this year, and we target flows to be positive in 2022. The rate of client retention in our wealth management business continues at a very high level. However, sales productivity has remained static for the past few quarters, despite our increased hiring in this channel. We have added six new financial consultants this year on top of the four we added in 2020. Why, then, has new business growth remained muted? Our staffing model in wealth management is distinct from the advisor acquisition strategies prevalent in our industry. Unlike most competitors, we are not acquiring advisory practices with associated books of business and revenues. We are hiring experienced financial consultants and financial planners, but they come without associated books, and they have to do two things. One, they are critical in the transition of some large client books where we have long-tenured financial consultants who are retiring or moving into new roles. And two, they need to develop a pipeline of new business with relationships they have as well as new relationships they develop. This takes time, and the results are just beginning to play out. is common knowledge that advisory practices are being acquired at unprecedented valuations. The advantage of our approach is that it doesn't increase the capital intensity of our business, but it does emphasize our priorities. For half a century, we have been providing clients with consistently and thoughtfully architected solutions that have many decades of superior audited, publicly available returns. We prize our distinctive culture and want to carefully integrate our new hires to ensure that they fully embrace our culture and enrich it. We are patient and are confident that results in wealth management will accelerate over time. And we are targeting positive net flows in wealth management in 2022. Our institutional channel, which is dominated by our sizable franchise with Taft-Hartley local plans, is making progress as well. We are engaging productively with consultants and gradually building towards advocacy. Our dialogues with the professional staff and trustees at our Taft-Hartley clients are good, as they have broadly experienced strong investment results with us. Establishing us as a growing presence in the institutional market will take time, and we project continued outflows in this channel in 2022. We continue to make progress on our extensive, exhaustive digital transformation. We completed the installation of Workday for human capital management in the quarter on time, on budget, and this was a massive effort. We migrated to Workday for finance previously, and we are now finally able to integrate talent management, performance reporting, payroll, benefits management, billing and payables, general ledger, and financial planning and analysis. The benefits of this integration will become visible in both greater efficiency and increased effectiveness beginning next year. We are far along in our implementation of Charles River for trade processing and order management and are now fully executing about a quarter of our portfolios in Charles River. We anticipate completing the transition to Charles River around the end of the first quarter of 2022. A migration to InvestCloud for front and middle office functions is coming along. We are simultaneously implementing a new CRM, an advisor portal, a new financial planning system, portfolio accounting system, and client reporting module. This is, needless to say, daunting, and we are working through many complexities. Further, there are substantial interdependencies with Charles Rivers. So we now anticipate completing the front office CRM and advisor portal by the early part of next year. The portfolio accounting and client reporting, which are entirely dependent on the completion of Charles River, are slated to go live in mid-2022. In sum, we continue to move forward aggressively on numerous fronts, striving, as always, to deliver excellent investment outcomes, superior advice, an outstanding service to our clients, while ensuring that the firm enjoys profitable growth. Our focus can enable us to deliver superior total returns to shareholders. And with that, I'll turn the call over to Paul for more details on our financials. Paul?