Good evening. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Manning & Napier Second Quarter 2020 Earnings Conference Call. Our hosts for today's call are Nicole Kingsley Brunner, Chief Marketing Officer; Marc Mayer, Chairman and Chief Executive Officer; and Paul Battaglia, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 7

00 p.m. Eastern today. The dial-in number is 404-537-3406 and enter PIN 2889015. [Operator Instructions] It is now my pleasure to turn the floor over to Ms. Nicole Kingsley Brunner.

Thank you, Angela, and thank you, everyone, for joining us today to discuss Manning & Napier's second quarter 2020 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 & Napier 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 on our earnings release and related SEC filings. With that, I will turn the call over to our Chairman and Chief Executive Officer, Mr. Marc Mayer. Marc?

Thank you, Nicole. As always, I will begin with a review of our performance for clients, after which I'll assess our second quarter progress on the strategic initiatives we discussed in detail during our last call. The past six months have been the ultimate test for active managers. In the first half of 2020, investors experienced both a historically sharp fair market and a historically strong market rebound, challenging the ability of managers to adapt to changing market conditions. Thus far in 2020, we have done exactly what we committed to clients

protecting on the downside and participating in the recovery. Our ability to adjust to rapidly changing market conditions has driven outstanding results. Our conservative positioning significantly mitigated the first quarter drawdown, and our rapid reallocation as equity markets bottomed enabled our clients to have the full benefit of the recovery in the second quarter. Our year-to-date performance has been broadly excellent

a clear demonstration of the power of our time-tested, disciplined active investment processes in action. All of these performance figures are available on Page 5 of the earnings supplement. Starting with our traditional multi-asset class solutions, which represent 70% of total AUM, we performed well in the second quarter with significant outperformance coming from our most equity-heavy strategies as sector and security selection continue to be strong. For the year and across the entire risk spectrum, client performance in our multi-asset class solutions is ahead of benchmarks by between 200 and 650 basis points. The mutual fund equivalents of our multi-asset class solutions all ranked in the top decile of their competitive groups for the year-to-date and all are well into the first quintile over 1 and 3 years. In a year when it is not hard for clients to be facing losses despite the strong bounce in equities in the second quarter, all of our multi-asset class and target date funds are up this year in absolute terms. We have over $600 million in our target date collective investment trusts, which are used in retirement plans. They are built on the same multi-asset class strategies we just referenced. All eleven target date vintages rank in the top 4% of their competitive set year-to-date and over the trailing year. Continuing with our fundamental bottom-up strategies, our core U.S. equity, core non-U.S. equity and core equity unrestricted portfolios all beat their respective benchmarks in the second quarter, extending their already robust leads on the year to 547, 802 and 591 basis points, respectively. Also notable is that each strategy's strong performance extended its relative performance edge to over 100 basis points for both the trailing 3- and 5-year time periods as well. For our core non-U.S. equity strategy in particular, the turnaround over the past few years has been remarkable. In the second quarter, the portfolio delivered 634 basis points of outperformance, adding to already strong recent results. In years past, our unique research disciplines and processes, coupled with strong performance, led our core non-U.S. equity strategy to wide recognition and category-leading status. While a difficult stretch last decade challenged the story, the strategy has fully restored its luster. I'd like to recognize the ability of our core equity research team, which operates globally in support of U.S. international and global portfolios to rigorously pursue our time-tested disciplines and recover all underperformance and then some for our clients. We are committed to delivering through full market cycles. And for 50 years, we have been doing just that. Our disciplined value suite performs well on a relative basis in the second quarter. While the value style continues to underperform growth, both disciplined value unrestricted and U.S. outperformed their respective benchmarks last quarter, and the performance over 1, 3, 5 and 10 years remained stellar. These strong relative results position the disciplined value suite well for future growth as maintaining exposure to the value style remains prudent ex ante. Our Rainier International Small Cap team produced another quarter of remarkable returns with its Rainier International Discovery Fund delivering 603 basis points of relative outperformance in the second quarter. The fund is now ahead of its international small-cap benchmark by 1,605 basis points year-to-date. At a time when its asset class is down double digits, the Rainier team has generated materially positive absolute returns. As a result, the fund is now ahead of its benchmark by an outstanding 768 and 440 basis points annualized over the trailing 3 and 5 years, respectively. Since inception in 2012, the fund is outperforming its benchmark by 662 basis points annualized, and the performance by Henrik Strabo and the team is extraordinary. Lastly, we continue to experience strong performance throughout most of our specialized investment strategies. Our real estate series remains ahead of benchmark by nearly 400 basis points year-to-date. In fixed income, our core bond series delivered over 100 basis points of relative outperformance in the second quarter. And in our municipal bond strategies, both our diversified tax-exempt series and New York tax-exempt series remain in the fifth percentile year-to-date as well. Before I enumerate our continuing progress against our strategic objectives, I'd like to comment on our commitment to upholding our goals as citizens of our great country. Our firm, like our country, has much work to do to ensure that we embrace diversity, equity and inclusion and confront and eliminate bias and racism. We have reconstituted our Diversity and Inclusion Committee, co-chaired by Stacey Green, our Head of Human Resources; and Sarah Turner, our General Counsel. We are taking strong tangible steps to drive bias and racism from our workplace. We are working to ensure compensation equity, and we are taking steps to further our already strong efforts to build a more diverse workforce, leadership group and Board. Finally, we are building on a culture of strong employee engagement and community involvement to be even more active at the corporate level in the communities in which we operate, most particularly near our headquarters in the Rochester, New York area where the needs are great. Let me speak briefly about governance. This afternoon, we announced that Ed Pettinella has been elected as our Lead Independent Director. Having a Lead Independent Director ensures that we will be following best practices in corporate governance. Ed has been the highly valued Chair of our Audit Committee. And I'm excited about the opportunity to partner with Ed and the full Board as we work together with Manning & Napier's entire team to realize our strategic objectives. So let me now turn to a review of progress against our strategic initiatives, as discussed during our last earnings call. And as a reminder, our strategic initiatives are two

one, invest in expanding a differentiated wealth management business; two, capitalize on our long history of investment excellence to grow our intermediary and institutional asset management businesses; three, further our investment excellence, for instance, by more explicitly incorporating ESG considerations; four, pursue a digital transformation that radically upgrades every element of our technology, enabling substantial efficiencies; five, simplify and enhance the efficiency of our operations, improving profitability; and six, increase employee ownership of the firm. Let me begin with wealth management. We reported last quarter that we had added 3 new financial consultants in wealth management, and their training has been progressing well. In fact, they have begun generating new business. Though not yet material, accelerating addition of new clients is one of the key green shoots that we monitor for progress. One of our goals in wealth management is to augment the already well-resourced advisory services we provide. This quarter, we signed a memorandum of understanding to partner with Paramax Corporation, a boutique investment bank based in Buffalo, New York. Paramax has been providing advice in the lower mid-market for 27 years, targeting small businesses with $1 million to $20 million in EBITDA, although they have advised on transactions up to valuations of $500 million. Our financial consultants will be able to partner with an investment bank that specializes in the sweet spot of our client and prospect universe, enabling us to bring greater value to our relationships. We expect to collaborate with Paramax Corporation on events and to refer clients to each other. Regarding the intermediary and institutional segments of our business, strong investment performance outlined earlier in the call is driving increased engagement and early signs of new business activity. We were notified of 2 institutional and/or platform mandate wins this quarter, which we expect to fund in the second half of the year, one in disciplined value and the other in Rainier International Small Cap. While neither represents a material increment to AUM, these mandates are coming after a multiyear drought of such wins and are important green shoots to monitor. We believe we are building strong momentum, and we look forward to continuing to capitalize on the opportunities afforded by our strong investment results and simplified ownership and governance structure. The increased investment and strategic focus of our sales channels, along with our marketing capabilities, technology upgrades and existing high-touch client services, are allowing us to continue to deliver the kind of clients' experience that is so critical to retaining business and winning referrals for new business. For example, the pandemic has driven a sharp uptick in the utilization of a broad range of our digital and content marketing efforts. We offer differentiated investments and financial insights for existing clients and potential new ones, and engagement metrics across all of these tactics are up substantially with webinar attendance 2 to 3 times prior averages. Specific business initiatives have been developed, integrating our digital marketing and field sales efforts. For example, a focus in our intermediary channel on working with retirement-focused advisers on cash balance plans, an area of expertise for us. Building on our investment strengths. Within research, we have undertaken a comprehensive study of asset allocation, investigating with fresh eyes both strategic and dynamic considerations. Such a study is warranted because the role of bonds must now be examined. For a century, bonds have provided both diversification and solid returns in 60-40 portfolios. And for 35 years, have been the backbone of risk parities, an alternate strategic allocation paradigm. We are now into our 13th year of financial repression. And while the future is never perfectly knowable, it isn't likely that investors will be able to get much in the way of returns from low-risk diversifying bond portfolios. The allocation study has been led by Chris Petrosino, leader of our Quantitative Strategies Group, which manages our disciplined value strategies. The same insights and clarity of thought that have underpinned the models that have delivered the excellent results in our DV strategies over 1, 3, 5 and 10 years are being brought to bear by Chris and his group on the foundational investment questions of asset allocations. The findings in the study are discussed and debated by our investment policy group, comprised of our most senior investment leaders

Ebrahim Busheri, Christian Andreach, Marc Bushallow, Chris Petrosino, Marc Tommasi and Jay Welles. I have been an invited nonvoting member at these IPG meetings. And as a former chief investment officer of asset allocation strategies at a prior firm, I can attest to the quality of the research and the depth and usefulness of the discussions. We have reaffirmed the underlying principles and strengths of many of our dynamic asset allocation processes, which have served investors in our multi-asset class portfolios so well this year and over many decades. We have also made substantial strides towards integrating sustainable investing principles or ESG into both our fundamental and quantitative investment processes. We have always considered these elements as risk factors. We are moving further, and we'll have more to report by the end of the year. A final note on research. We employed 6 research interns this summer, all working remotely. It is the largest intern class we have ever had, the most diverse and an outstanding group who have made substantial contributions. We will be making offers shortly and are optimistic that they will be accepted. Pending those results and coupled with the yield from last summer's internship program, which was also strong in both quality and diversity, we are building a potential pipeline of great research talent while meaningfully advancing our goal of building a more diverse organization. Our digital transformation. The important technology investments made in 2019 and early 2020 continue to enable us -- the overwhelming majority of our workforce to remain remote and fully productive. Our major systems initiatives continue to move forward consistent with the budgets and schedules we set at the beginning of the year. The large complex InvestCloud implementation is going very well. We expect to launch a client portal in the fall, and developments of bespoke financial planning tools, a powerful data warehouse enabling superior client reporting, an adviser portal, sophisticated tax planning tools, hybrid robo-advice and numerous other capabilities are anticipated over the next 18 months. By the end of 2021, we will have replaced substantially all our legacy systems in every area of the firm

investments, distribution, operations, IT, finance, HR, with state-of-the-art cloud-based SaaS technology. The significant expense and huge effort will enable better client experiences, greater efficiency, lower cost and substantially better business intelligence. In terms of simplification and profitability improvement, Paul will speak at length about our financial results. So I will only speak briefly about our ongoing and essential efforts to rightsize our firm. First, I will note the commitment that we, like many companies, made to our employees. When the COVID crisis began in March, we said that the safety, health and security, including job security, of our employees was our priority. This remains the case today. However, I've also indicated to our employees that our firm must become leaner, more efficient and more profitable. We made some progress on that score in the second quarter as our operating margin improved to 10% from 7% a year ago and 6% in the first quarter. These levels are still below acceptable standards. Last quarter, we committed to getting to $20 million or more in operating profit in an investable time frame. In order to do so, we will need both improved sales productivity and greater cost discipline. It is our expectation that our compensation and benefits ratio will continue to decline to 50% or below in order to drive $20 million or more of operating profit. And finally, increasing employee ownership. The exchange that closed in May, whereby the firm bought back approximately 60 million private units held by Bill Manning and other selling unitholders for approximately $90 million in cash, was accretive to all shareholders, including employees. Employees and the Board now own approximately 30% of the adjusted shares outstanding when we include their unvested share awards, which do represent the majority of these shares. Employee and Board ownership, excluding Bill Manning, stood at approximately 5% of the adjusted shares a year ago. The combination of long-term incentive awards made in February of this year with the subsequent highly accretive exchange has rapidly moved us towards a much more desirable proportion of employee ownership, ensuring that employees think and act like owners at all times. Finally and speaking of the foundation of our firm, we at Manning & Napier celebrated our 50th anniversary in April. While now is, for many reasons, a challenging time for celebration, it is an opportune time to reflect with pride on all that we have accomplished over our first 5 decades. As always, we believe that by doing right for clients, we will do right for the business as well. And with that, I'll turn the call over to Paul for more details on our financials. Paul?

Thanks, Marc. Good afternoon, everyone, and thanks for joining us today. I hope everyone on the call with us is healthy and well. I'll begin my remarks on our second quarter 2020 financial results, starting with assets under management. We finished June with AUM of $18.6 billion, up from $17.1 billion as of March 31. This 9% increase came on the heels of the market rebound that Marc outlined earlier, with $2 billion in market appreciation offset by approximately $660 million of net client outflows. Analysis of our net client cash flows must consider that the second quarter of 2020 took place exclusively during a period of COVID-related travel restrictions. Gross client inflows were approximately $550 million, down from $670 million in Q1 of 2020 and from our trailing four quarter average, which is also $670 million. However, second quarter inflows were comparable to what we brought in during the second quarter of 2019 despite COVID, an indicator that our sales strategy is gaining traction in a challenging environment. We reported approximately $200 million of inflows through our wealth management channel, generally in line with last quarter, with approximately $360 million of inflows through our intermediary and institutional team where travel restrictions limited wholesaling efforts. Reducing client outflows has been a priority for us. And we have been encouraged that our competitive investment results and service-driven model have allowed us to achieve some traction toward that goal. Gross client outflows for the quarter were $1.2 billion, an improvement from our trailing 4-quarter average outflows of $1.7 billion. And our separate account retention rate for the quarter was approximately 93%. By sales team, the wealth management team had net client outflows of $167 million during the quarter, and the institutional/intermediary team had $491 million in net outflows. Also notable here, there was a single Taft-Hartley relationship that rebalanced a portion of their portfolio away from us that caused approximately $200 million of intermediary/institutional outflows. Aside from that single relationship, outflows for that channel would have been in line with last quarter. We are pleased that we have reduced the rate of net client outflows compared to prior periods despite the impacts of COVID. We continue to see indicators that our strategy is gaining momentum in the form of improved activity with our wealth management prospects and the quality of our conversations with third-party intermediaries and in Taft-Hartley opportunities. However, uncertainty continues to be the theme of this market and economic environment. And as such, we continue to have a conservative outlook regarding net client flows in the near term. Turning to our second quarter P&L. We reported revenue of $30.3 million for the quarter, down by 2% from $31.1 million reported in Q1 driven by the change in average AUM during the quarter. Overall revenue margins were 67 basis points. Operating expenses were $27.3 million in the quarter, a decrease of $1.9 million or 6% compared to last quarter and a $4.5 million decline compared to Q2 2019. The majority of the sequential decrease is explained by a 10% drop in compensation-related costs. This reduction is attributable to charges included in the first quarter, including severance costs, stock compensation paid to our directors as well as the seasonality of our payroll benefits, like our 401(k) match. We are also seeing the impact of the overall reduction in the size of our workforce, which is down to 288 employees as of June 30. Our compensation-related cost as a percentage of revenue was 57%, down from 62% in the first quarter. Distribution, servicing and custody expenses were $2.4 million for the quarter or 18 basis points of average fund and collective trust assets. And the nearly $400,000 decrease from last quarter is driven by changes in AUM. Other operating expenses increased sequentially by $400,000 to $7.5 million for the quarter. The current quarter includes a noncash impairment charge of approximately $600,000 attributable to a portion of our leased space in Fairport, which we vacated as part of our workforce downsizing. Looking ahead, we expect that other operating expenses will increase beginning in the fourth quarter and into 2021 as the new technologies that Marc mentioned earlier come online and the associated fees begin hitting our P&L. The outsized reduction in operating expenses resulted in improvement in operating income, with $3.1 million of operating income compared to $1.9 million last quarter. Non-operating income also improved as we recognized a $2.7 million gain in the quarter compared to a $4.3 million loss in Q1. About half of the $7 million improvement was attributable to gains on our marketable securities for the quarter. We are reporting $1.4 million in gains on our investments compared to nearly $2 million in losses last quarter. The remainder of the improvement is attributable to the accounting for the tax receivable agreement. As last quarter, we reported a nearly $3 million non-operating loss resulting from changes under the CARES Act compared to the income of $900,000 in Q2. As a result, on a GAAP basis, we reported pretax income for the quarter of $5.7 million compared to a $2.4 million loss last quarter. After accounting for nearly $1 million of strategic restructuring costs, including the $600,000 noncash charge associated with our vacated facilities that I mentioned earlier, we reported economic income of $6.7 million. Our effective tax rate for the quarter was 41%, resulting in economic net income of approximately $4 million. All told, we reported second quarter economic net income per adjusted share of $0.08, a $0.06 improvement from $0.02 per adjusted share last quarter. This increase is attributable to both the improvement in our operating results and also a result of the reduced share count stemming from the accretive exchange transaction that we closed during the quarter. Our weighted average adjusted share count for the quarter was approximately 48 million adjusted shares, down from 81 million in the first quarter. I'll have more comments regarding the impact of the exchange transaction that closed in mid-May shortly. But before we leave the P&L discussion, let me quickly summarize our year-to-date results. We reported revenue of $61.5 million, down 11% from $69.1 million this time last year, with overall revenue margins of 66 basis points. Operating expenses were $56.5 million, a decrease of $8.9 million or 14% from last year. More than half of the decrease is attributable to reductions in compensation, though expenses are down across the board from last year largely as a result of our smaller workforce, down from 336 this time last year to 288 as of June 30, as well as reductions in AUM and expense reductions resulting from COVID. We reported operating income of nearly $5 million through June 30, an improvement from $3.8 million last year. In addition, we recognized a non-operating loss of $1.6 million through June 30, 2020, driven by the losses reported in the first quarter stemming from the COVID-related volatility. As a result, despite the improvement in operating income, pretax earnings and economic income through June 30 of $3.4 million and $5 million, respectively, are down from last year. However, economic net income per adjusted share shows an improvement from this time last year as a result of the reduced share count following the exchange transaction. Looking at the balance sheet. We reported approximately $65 million of cash and investments with no debt. The decrease from March 31 was expected and is entirely attributable to the completion of the annual exchange transaction that we have discussed previously, with approximately $90 million of cash being used to buy back and subsequently retire 60 million private units held by Bill Manning and other legacy shareholders. The completion of the exchange led to a reduction in the adjusted share count and meaningful accretion for non-selling shareholders. Post-exchange, the adjusted share count of 22 million shares outstanding includes approximately 16 million Class A shares. As of June 30, our employees and directors own approximately 30% of the adjusted shares, including a portion of the 16 million Class A shares along with unvested equity awards and privately held units. In closing, as we reflect back on the quarter, we are grateful to our people in everything we've achieved during the challenging circumstances. April started with unprecedented market volatility caused by the pandemic that led to our most active trading period ever. In May, we completed the largest of our annual exchange transactions, achieving meaningful accretion for our shareholders. And throughout the quarter, our team worked tirelessly to focus on strategic initiatives, including implementation of a new technology platform, all while working remotely. We are very proud of how we executed and the results we achieved for clients and shareholders in this environment. We are excited about our positioning for future growth and long-term distribution prospects, but there's still significant work to be done in the near term, during which time we continue to expect P&L pressure as we navigate this environment. We expect that flows across channels will continue to be slowed by the uncertainty of the times. While the first phase of our technology platforms will begin to come online during the third quarter, these are multiyear installations that will continue to use resources into 2021. And we continue to evaluate our product and service offerings and back-office processes to identify opportunities to simplify and improve our business. However, this evaluation is complex because of the current status of our technology implementation and the overall environment. It is our expectation that the pressure on top line growth and earnings that we have faced thus far in 2020 will remain in place for the second half of the year and likely the first part of 2021. It is crucial that the focus be on our clients and on executing our strategic plan during this time despite the pressure on earnings so that we can build a foundation from which we can grow and deliver returns for both clients and shareholders in the future. That concludes my formal remarks. I'll now turn the call back over to the operator, and we'll take any questions. Operator?

[Operator Instructions] And there are no questions at this time. Thank you. This does conclude today's conference call. Please disconnect your lines at this time, and have a wonderful day.

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Thanks everyone. Bye.

Thank you.