Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2022
OR
¨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)

Delaware45-2609100
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
290 Woodcliff Drive
Fairport, New York
14450
Fairport,New York14450
(Address of principal executive offices)(Zip Code)

(585) 325-6880
(Registrant’s telephone number, including area code:
(585) 325-6880code)
_____________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.01 par value per shareMNNew 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 Filerx
Non-accelerated filer¨Smaller reporting companyx
Large accelerated filer¨Accelerated filerx
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
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.
ClassOutstanding at November 3, 2017May 5, 2022
Class A common stock, $0.01 par value per share15,039,347
Class B common stock, $0.01 par value per share1,00019,124,332






TABLE OF CONTENTS
 
Page
Part I
Item 1.
Item 2.
Item 3.
Item 4.
Part II
Item 1A.
Item 6.
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.
 



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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Manning & Napier, Inc.
Consolidated Statements of Financial Condition
(InU.S. dollars in thousands, except share data)
 
 September 30, 2017 December 31, 2016March 31, 2022December 31, 2021
 (unaudited)   (unaudited) 
Assets    Assets
Cash and cash equivalents $103,322
 $100,819
Cash and cash equivalents$51,738 $73,489 
Accounts receivable 11,041
 15,434
Accounts receivable11,140 13,851 
Accounts receivable—affiliated mutual funds 6,213
 6,761
Investment securities 38,322
 36,475
Investment securities37,020 24,608 
Investment securities - consolidated funds 
 995
Prepaid expenses and other assets 2,977
 4,883
Prepaid expenses and other assets17,791 17,147 
Total current assets 161,875
 165,367
Total current assets117,689 129,095 
Property and equipment, net 5,536
 5,680
Property and equipment, net2,177 2,109 
Operating lease right-of-use assetsOperating lease right-of-use assets12,999 14,457 
Net deferred tax assets, non-current 39,563
 41,905
Net deferred tax assets, non-current17,875 17,859 
Goodwill 4,829
 4,829
Goodwill4,829 4,829 
Other long-term assets 2,784
 2,818
Other long-term assets2,999 3,074 
Total assets $214,587
 $220,599
Total assets$158,568 $171,423 
    
Liabilities    Liabilities
Accounts payable $1,915
 $2,053
Accounts payable$1,909 $1,791 
Accrued expenses and other liabilities 25,609
 35,115
Accrued expenses and other liabilities25,988 36,388 
Deferred revenue 10,326
 10,210
Deferred revenue12,945 12,963 
Total current liabilities 37,850
 47,378
Total current liabilities40,842 51,142 
Operating lease liabilities, non-currentOperating lease liabilities, non-current12,708 14,226 
Amounts payable under tax receivable agreement, non-currentAmounts payable under tax receivable agreement, non-current13,499 13,499 
Other long-term liabilities 3,352
 4,034
Other long-term liabilities148 155 
Amounts payable under tax receivable agreement, non-current 32,244
 34,709
Total liabilities 73,446
 86,121
Total liabilities67,197 79,022 
Commitments and contingencies (Note 8) 

 

Commitments and contingencies (Note 9)Commitments and contingencies (Note 9)00
Shareholders’ equity    Shareholders’ equity
Class A common stock, $0.01 par value; 300,000,000 shares authorized; 15,039,347 and 14,982,880 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 150
 150
Class B common stock, $0.01 par value; 2,000 shares authorized, 1,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 
 
Class A common stock, $0.01 par value; 300,000,000 shares authorized; 19,873,337 and 19,124,332 shares issued and outstanding at March 31, 2022, 19,503,085 and 18,754,080 shares issued and outstanding at December 31, 2021Class A common stock, $0.01 par value; 300,000,000 shares authorized; 19,873,337 and 19,124,332 shares issued and outstanding at March 31, 2022, 19,503,085 and 18,754,080 shares issued and outstanding at December 31, 2021199 195 
Treasury stock, at cost, 749,005 shares at March 31, 2022 and December 31, 2021Treasury stock, at cost, 749,005 shares at March 31, 2022 and December 31, 2021(5,666)(5,666)
Additional paid-in capital 198,536
 200,158
Additional paid-in capital103,567 104,740 
Retained deficit (35,706) (37,383)Retained deficit(5,339)(5,569)
Accumulated other comprehensive income (loss) (30) (13)
Accumulated other comprehensive lossAccumulated other comprehensive loss(428)(337)
Total shareholders’ equity 162,950
 162,912
Total shareholders’ equity92,333 93,363 
Noncontrolling interests (21,809) (28,434)Noncontrolling interests(962)(962)
Total shareholders’ equity and noncontrolling interests 141,141
 134,478
Total shareholders’ equity and noncontrolling interests91,371 92,401 
Total liabilities, shareholders’ equity and noncontrolling interests $214,587
 $220,599
Total liabilities, shareholders’ equity and noncontrolling interests$158,568 $171,423 
The accompanying notes are an integral part of these consolidated financial statements.



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Manning & Napier, Inc.
Consolidated Statements of Operations
(InU.S. dollars in thousands, except share data)
(Unaudited)
 
 Three months ended September 30, Nine months ended September 30, Three months ended March 31,
 2017 2016 2017 201620222021
Revenues        Revenues
Investment management services revenue $48,838
 $63,305
 $155,859
 $189,852
Investment management feesInvestment management fees$30,827 $29,676 
Distribution and shareholder servicingDistribution and shareholder servicing2,082 2,153 
Custodial servicesCustodial services1,677 1,645 
Other revenueOther revenue963 677 
Total revenueTotal revenue35,549 34,151 
Expenses        Expenses
Compensation and related costs 22,287
 24,627
 67,901
 70,973
Compensation and related costs20,707 18,874 
Distribution, servicing and custody expenses 6,920
 8,798
 21,415
 26,590
Distribution, servicing and custody expenses2,280 2,358 
Other operating costs 7,887
 8,188
 23,099
 24,854
Other operating costs11,477 6,710 
Total operating expenses 37,094
 41,613
 112,415
 122,417
Total operating expenses34,464 27,942 
Operating income 11,744
 21,692
 43,444
 67,435
Operating income1,085 6,209 
Non-operating income (loss)        Non-operating income (loss)
Interest expense (22) (127) (34) (339)Interest expense(1)(2)
Interest and dividend income 191
 141
 609
 457
Interest and dividend income40 123 
Change in liability under tax receivable agreement (33) (76) (33) (94)
Net gains (losses) on investments 711
 (80) 2,293
 1,192
Net gains (losses) on investments(646)337 
Total non-operating income (loss) 847
 (142) 2,835
 1,216
Total non-operating income (loss)(607)458 
Income before provision for income taxes 12,591
 21,550
 46,279
 68,651
Provision for income taxes 739
 1,565
 3,324
 4,784
Income before provision for (benefit from) income taxesIncome before provision for (benefit from) income taxes478 6,667 
Provision for (benefit from) income taxesProvision for (benefit from) income taxes(746)703 
Net income attributable to controlling and noncontrolling interests 11,852
 19,985
 42,955
 63,867
Net income attributable to controlling and noncontrolling interests1,224 5,964 
Less: net income attributable to noncontrolling interests 10,331
 17,727
 37,852
 56,586
Less: net income attributable to noncontrolling interests38 724 
Net income attributable to Manning & Napier, Inc. $1,521
 $2,258
 $5,103
 $7,281
Net income attributable to Manning & Napier, Inc.$1,186 $5,240 
        
Net income per share available to Class A common stock        Net income per share available to Class A common stock
Basic $0.10
 $0.15
 $0.35
 $0.49
Basic$0.06 $0.31 
Diluted $0.10
 $0.15
 $0.35
 $0.48
Diluted$0.06 $0.26 
Weighted average shares of Class A common stock outstanding        Weighted average shares of Class A common stock outstanding
Basic 14,249,347
 14,042,880
 14,135,288
 13,916,721
Basic18,988,573 17,026,500 
Diluted 78,210,019
 14,175,321
 14,241,642
 14,173,283
Diluted21,551,937 20,273,343 
Cash dividends declared per share of Class A common stock $0.08
 $0.16
 $0.24
 $0.48
The accompanying notes are an integral part of these consolidated financial statements.



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Manning & Napier, Inc.
Consolidated Statements of Comprehensive Income
(InU.S. dollars in thousands)
(Unaudited)
 Three months ended March 31,
20222021
Net income attributable to controlling and noncontrolling interests$1,224 $5,964 
Net unrealized holding gains (losses) on investment securities, net of tax(93)
Reclassification adjustment for net realized losses on investment securities included in net income97 
Comprehensive income$1,140 $6,069 
Less: Comprehensive income attributable to noncontrolling interests45 822 
Comprehensive income attributable to Manning & Napier, Inc.$1,095 $5,247 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Net income attributable to controlling and noncontrolling interests $11,852
 $19,985
 $42,955
 $63,867
Net unrealized holding gain (loss) on investment securities, net of tax (2) 1
 (17) 7
Comprehensive income $11,850
 $19,986
 $42,938
 $63,874
Less: Comprehensive income attributable to noncontrolling interests 10,329
 17,728
 37,835
 56,593
Comprehensive income attributable to Manning & Napier, Inc. $1,521
 $2,258
 $5,103
 $7,281

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



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Manning & Napier, Inc.
Consolidated Statements of Shareholders’ Equity
(InU.S. dollars in thousands, except share data)
(Unaudited)
 Common Stock –  Class ATreasury StockAdditional
Paid in Capital
Retained
Deficit
Accumulated
Other
Comprehensive Income (Loss)
Non
Controlling
Interests
 
SharesAmountSharesAmountTotal
Three months ended March 31, 2022
Balance—December 31, 202118,754,080 $195 749,005 $(5,666)$104,740 $(5,569)$(337)$(962)$92,401 
Net income— — — — — 1,186 — 38 1,224 
Distributions to noncontrolling interests— — — — — — — (45)(45)
Net changes in unrealized investment securities gains or losses— — — — — — (91)(2)(93)
Common stock issued under equity compensation plan, net of forfeitures370,252 — — (4)— — — — 
Shares withheld to satisfy tax withholding requirements related to equity awards— — — — (1,640)— — (38)(1,678)
Equity-based compensation— — — — 506 — — 12 518 
Dividends declared on Class A common stock - $0.05 per share— — — — — (956)— — (956)
Impact of changes in ownership of Manning & Napier Group, LLC (Note 4)— — — — (35)— — 35 — 
Balance—March 31, 202219,124,332 $199 749,005 $(5,666)$103,567 $(5,339)$(428)$(962)$91,371 
Common Stock –  Class ATreasury StockAdditional
Paid in Capital
Retained
Deficit
Accumulated
Other
Comprehensive Income (Loss)
Non
Controlling
Interests
 
 Common Stock –  class A Common Stock – class B 
Additional
Paid in Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive Income (Loss)
 
Non
Controlling
Interests
  SharesAmountSharesAmountTotal
 Shares Amount Shares Amount Total
Balance—December 31, 2015 14,755,130
 $148
 1,000
 $
 $205,760
 $(37,149) $(3) $(33,976) $134,780
Net income 
 
 
 
 
 7,281
 
 56,586
 63,867
Distributions to noncontrolling interests 
 
 
 
 
 
 
 (34,153) (34,153)
Net changes in unrealized investment securities gains or losses 
 
 
 
 
 
 7
 
 7
Common stock issued under equity compensation plan 277,750
 2
 
 
 (2) 
 
 
 
Shares withheld to satisfy tax withholding requirements related to restricted stock units granted 
 
 
 
 (162) 
 
 (791) (953)
Equity-based compensation 
 
 
 
 433
 
 
 2,102
 2,535
Dividends declared on Class A common stock - $0.48 per share 
 
 
 
 
 (7,159) 
 
 (7,159)
Impact of changes in ownership of Manning & Napier Group, LLC 
 
 
 
 (2,144) 
 
 (13,991) (16,135)
Balance—September 30, 2016 15,032,880
 $150
 1,000
 $
 $203,885
 $(37,027) $4
 $(24,223) $142,789
                  
Balance—December 31, 2016 14,982,880
 $150
 1,000
 $
 $200,158
 $(37,383) $(13) $(28,434) $134,478
Three months ended March 31, 2021Three months ended March 31, 2021
Balance—December 31, 2020Balance—December 31, 202016,989,943 $170 $— $— $111,848 $(28,826)$(235)$(7,200)$75,757 
Net income 
 
 
 
 
 5,103
 
 37,852
 42,955
Net income— — — — — 5,240 — 724 5,964 
Distributions to noncontrolling interests 
 
 
 
 
 
 
 (24,490) (24,490)Distributions to noncontrolling interests— — — — — — — (295)(295)
Net changes in unrealized investment securities gains or losses 
 
 
 
 
 
 (17) 
 (17)Net changes in unrealized investment securities gains or losses— — — — — — 
Common stock issued under equity compensation plan, net of forfeitures 56,467
 
 
 
 
 
 
 
 
Common stock issued under equity compensation plan, net of forfeitures433,259 — — (4)— — — — 
Shares withheld to satisfy tax withholding requirements related to restricted stock units vested 
 
 
 
 (48) 
 
 (224) (272)
Shares withheld to satisfy tax withholding requirements related to equity awardsShares withheld to satisfy tax withholding requirements related to equity awards— — — — (2,582)— — (322)(2,904)
Equity-based compensation 
 
 
 
 304
 
 
 1,412
 1,716
Equity-based compensation— — — — 1,091 — — 136 1,227 
Dividends declared on Class A common stock - $0.24 per share 
 
 
 
 
 (3,426) 
 
 (3,426)
Impact of changes in ownership of Manning & Napier Group, LLC (Note 4) 
 
 
 
 (1,878) 
 
 (7,925) (9,803)
Balance—September 30, 2017 15,039,347
 $150
 1,000
 $
 $198,536
 $(35,706) $(30) $(21,809) $141,141
Purchases of treasury stockPurchases of treasury stock(412,405)— 412,405 (2,987)— — — — (2,987)
Impact of changes in ownership of Manning & Napier Group, LLCImpact of changes in ownership of Manning & Napier Group, LLC— — — — (171)— — 171 — 
Balance—March 31, 2021Balance—March 31, 202117,010,797 $174 412,405 $(2,987)$110,182 $(23,586)$(228)$(6,785)$76,770 
The accompanying notes are an integral part of these consolidated financial statements.

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Manning & Napier, Inc.
Consolidated Statements of Cash Flows
(InU.S. dollars in thousands)
(Unaudited)
 
 Nine months ended September 30, Three months ended March 31,
 2017 201620222021
Cash flows from operating activities:    Cash flows from operating activities:
Net income attributable to controlling and noncontrolling interests $42,955
 $63,867
Net income attributable to controlling and noncontrolling interests$1,224 $5,964 
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 1,716
 2,535
Equity-based compensation518 1,227 
Depreciation and amortization 1,328
 1,952
Depreciation and amortization2,620 436 
Change in amounts payable under tax receivable agreement 33
 94
Change in contingent consideration liability 
 (500)
Net (gains) losses on investment securities (2,293) (1,192)
Impairment of long-lived assetsImpairment of long-lived assets430 — 
Net losses (gains) on investment securitiesNet losses (gains) on investment securities646 (337)
Deferred income taxes 2,342
 2,212
Deferred income taxes(16)756 
Amortization of debt issuance costs 
 117
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:    (Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Accounts receivable 4,073
 2,011
Accounts receivable2,712 1,139 
Accounts receivable—affiliated mutual funds 548
 1,862
Due from broker - consolidated funds 
 3,795
Prepaid expenses and other assets 1,907
 1,238
Prepaid expenses and other assets(2,992)(2,089)
Other long-term assetsOther long-term assets565 627 
Accounts payable (138) (349)Accounts payable118 484 
Accrued expenses and other liabilities (10,599) (12,196)Accrued expenses and other liabilities(10,455)(13,868)
Deferred revenue 116
 (68)Deferred revenue(18)640 
Other long-term liabilities (671) (8)Other long-term liabilities(941)(706)
Net cash provided by operating activities 41,317
 65,370
Net cash used in operating activitiesNet cash used in operating activities(5,589)(5,727)
Cash flows from investing activities:    Cash flows from investing activities:
Purchase of property and equipment (1,057) (240)Purchase of property and equipment(313)(2)
Sale of investments 12,871
 9,033
Sale of investments6,373 4,001 
Purchase of investments (38,510) (4,229)Purchase of investments(20,240)(4,063)
Due from broker 
 4,022
Proceeds from maturity of investments 27,063
 
Proceeds from maturity of investments715 — 
Acquisitions, net of cash received 320
 (9,321)
Net cash provided by (used in) investing activities 687
 (735)
Net cash used in investing activitiesNet cash used in investing activities(13,465)(64)
Cash flows from financing activities:    Cash flows from financing activities:
Distributions to noncontrolling interests (24,490) (34,153)Distributions to noncontrolling interests(45)(295)
Dividends paid on Class A common stock (4,802) (7,123)Dividends paid on Class A common stock(956)— 
Payment of shares withheld to satisfy withholding requirements (272) (953)Payment of shares withheld to satisfy withholding requirements(1,678)(3,349)
Purchases of treasury stockPurchases of treasury stock— (2,987)
Payment of capital lease obligations (134) (154)Payment of capital lease obligations(18)(18)
Purchase of Class A units of Manning & Napier Group, LLC (9,803) (16,135)
Net cash used in financing activities (39,501) (58,518)Net cash used in financing activities(2,697)(6,649)
Net increase (decrease) in cash and cash equivalents 2,503
 6,117
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents(21,751)(12,440)
Cash and cash equivalents:    Cash and cash equivalents:
Beginning of period 100,819
 117,591
Beginning of period73,489 57,635 
End of period $103,322
 $123,708
End of period$51,738 $45,195 
The accompanying notes are an integral part of these consolidated financial statements.

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Manning & Napier, Inc.
Notes to Consolidated Financial Statements


Note 1—Organization and Nature of the Business
Manning & Napier, Inc. ("Manning & Napier", or the "Company") is an independent investment management firm that provides our clients with a broad range of financial solutions and investment solutions through separately managed accounts, mutual funds, and collective investment trusts, as well as a variety of consultative services that complement its investment process.strategies. Founded in 1970 the Company offers U.S. and non-U.S. equity, fixed income and a range of blended asset portfolios, such as life cycle funds and actively-managed exchange-traded fund ("ETF")-based portfolios. Headquarteredheadquartered in Fairport, New York,NY, the Company serves a diversified client base of high net worthhigh-net-worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans, endowments and foundations. The Company's investment strategies offer equity, fixed income and a range of blended asset portfolios, including life cycle funds.
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"Group”), a holding company for the investment management businesses conducted by its operating subsidiaries. The diagram below depicts the Company's organizationorganizational structure as of September 30, 2017.March 31, 2022.
  orgstructureimageq32017mncol.jpgmn-20220331_g1.jpg
(1)The consolidated operating subsidiaries of Manning & Napier Group include Manning & Napier Advisors, LLC ("MNA"), Manning & Napier Alternative Opportunities, LLC, Perspective Partners LLC, Manning & Napier Information Services, LLC, Manning & Napier Benefits, LLC, Manning & Napier Investor Services, Inc., Exeter Trust Company and Rainier Investment Management, LLC.
(2)On November 17, 2017, all outstanding shares of the Company's Class B common stock will be automatically, without any further action on the Company's part or the holder of the shares of the Company's Class B common stock, canceled and will revert to the status of authorized but unissued shares of Class B common stock.
(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").
Plan of Acquisition by Callodine Group, LLC.
On March 31, 2022, the Company entered into an agreement (the "Merger Agreement") under which the Company will go private and be acquired by Callodine Group, LLC ("Callodine"), with the Company continuing as the surviving corporation (the "Merger").
Pursuant to the Merger Agreement, each outstanding share of common stock of the Company and Manning & Napier Group Holdings outstanding units will be converted into the right to receive from Callodine $12.85 in cash. The proposed acquisition is expected to close in the third quarter of 2022, contingent upon shareholder approval and other customary closing conditions.
Note 2—Summary of Significant Accounting Policies
Critical Accounting Policies
There have been no significant changes in ourThe Company's critical accounting policies and estimates from those that wereare disclosed in ourits Annual Report on Form 10-K for the year ended December 31, 2016.
Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

2021. 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 ourthe Company's Annual Report on Form 10-K for the year ended December 31, 2016.2021. 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
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Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)
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.
Principles of Consolidation
The Company consolidates all majority-owned subsidiaries. In addition, asAs of September 30, 2017,March 31, 2022, Manning & Napier holds an economic interest of approximately 17.8%97.8% in Manning & Napier Group but,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 Manning & Napier Capital Company, LLC (“MNCC”).Holdings.
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 productsstrategies 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 March 31, 2022 and December 31, 2021, 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”), Rainier Investment Management Mutual Funds and Rainier Multiple Investment Trust. The Fund, CIT Rainier Investment Management Mutual Funds 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 $1.5$14.9 million as of September 30, 2017March 31, 2022 and $1.3$1.1 million as of December 31, 2016.2021. As of March 31, 2022 and December 31, 2016,2021, the Company maintaineddid not have a controlling financial interest in oneany mutual fund, fund.
Revenue
Investment Management: Investment management fees are computed as a percentage of assets under management ("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
7

Manning & Napier, Fund, Inc. Quality Equity Series,
Notes to Consolidated Financial Statements (Continued)
whether revenue should be reported gross or net of payments to third-party service providers. The Company controls the services provided and consolidated the mutual fund. As of September 30, 2017, the Company did not maintainacts as a controlling financial interest, but did retain significant influenceprincipal in the mutual fund,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 value fee, the Company's performance obligation is a series of services that form part of a single performance obligation satisfied over time. Revenue for transactions assigned a stand-alone selling price is recognized in the period in which was accountedthe 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 an equity method investment.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 havehas been classified as Level 1 in accordance with the fair value hierarchy.
Investment Securities
Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

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 tradingequity investments, at fair value consist of equity securities, fixed income 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, are recorded in net gains (losses) on investments in the consolidated statements of operations. At September 30, 2017, trading securities consist solely of investments held by the Company to provide initial cash seeding for product development purposes.
Investments classified as equity method investments represent seed investments in which the Company owns between 20-50% of the outstanding voting interests in the affiliated fund or when it is determined that the Company is able to exercise significant influence but not control over the investments. If the seed investment results in significant influence, but not control, the investment will be accounted for as an equity method investment. When using the equity method, the Company recognizes its share of the investee's net income or loss for the period which isapplicable, are recorded in net gains (losses) on investments in the consolidated statements of operations.
Investment securities classified as available-for-sale consist of U.S. Treasury notessecurities and other short-term investments.corporate 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 stockholders’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 EquipmentDepreciation
Property and equipment is presented net of accumulated depreciation of approximately $11.3$8.7 million and $11.6$8.6 million as of September 30, 2017March 31, 2022 and December 31, 2016,2021, 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 $5.1 million and $7.0 million, net of accumulated amortization, as of March 31, 2022 and December 31, 2021, respectively.
During the three months ended March 31, 2022 , the Company recognized a $1.9 million charge for the impairment of certain internal and external costs capitalized in connection with hosted software arrangements, which is reflected within other operating costs in the statements of operations. This impairment charge was recorded subsequent to the Company's determination that portions of a software license agreement with a third-party service provider would be terminated. As such, the Company concluded that capitalized costs associated with the terminated services would not ultimately be completed and placed into service. The Company does not expect to incur future cash expenditures in connection with terminating these services.
8

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)
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.
On May 10, 2017,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 operating lease ROU asset is reduced for any lease incentives. The Company's lease terms may include options to extend or 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 of Long-Lived Assets
The Company reviews 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 three months ended March 31, 2022, the Company entered into ana sublease agreement for a portion of the Company's currently occupied office space, triggering a change in the way the leased asset is utilized by the Company. The subleased space was determined to sell certain U.S. mutual funds tobe a third party.separate asset group from the remaining office space leased by the Company, and as such represents a distinct ROU asset and lease liability. The transaction isCompany assessed recoverability of the asset group by comparing the undiscounted future net cash flows expected to close duringresult from the fourth quarter of 2017, with the selling price based on the total assets under management on the transaction closing date. As of September 30, 2017, the assets under management for these products was approximately $0.4 billion.asset group to its carrying value. The carrying value exceeded the undiscounted future net cash flows of the intangible assetsasset, and an impairment loss of approximately $0.5 million was recognized during the three months ended March 31, 2022 as the difference between the net book value and the fair value of the asset group.
Treasury Stock
Treasury stock is accounted for client relationships associated with these products was $0under the cost method and is included as a deduction from equity in the Shareholders' Equity section of September 30, 2017.the consolidated statements of financial condition. Upon any subsequent retirement or resale, the treasury stock account is reduced by the cost of such stock.
Operating Segments
The Company operates in one1 segment, the investment management industry.
Revenue
9
The majority of the Company’s revenues are based on fees charged to manage customers’ portfolios. Investment management fees are generally computed as a percentage of assets under management ("AUM") and recognized as earned. Fees for providing investment advisory services are computed and billed in accordance with the provisions of the applicable investment management agreements. For the Company’s separately managed accounts, clients either pay investment management fees 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 and recognizes it over the applicable period. When investment management fees are paid in arrears, the Company estimates revenues based on AUM market values as of the most recent month end date, and adjusts to actual when billed. For mutual funds and collective investment trust vehicles, the Company’s fees are calculated and earned daily based on AUM. Investment management fees are presented net of cash rebates and fees waived pursuant to contractual expense limitations of the funds.
The Company is contractually obligated to make payments to certain advisory clients with the intent of providing those clients a discounted fee. In accordance with ASC 605-50, Revenue Recognition - Customer Payments and Incentives, these payments are presented as a reduction to revenue. There were no incentives reported as a reduction to revenue for the three

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 months ended September 30, 2017, while incentives were $3.4 millionMarch 31, 2022 and 2021:
 Three months ended March 31, 2022Three months ended March 31, 2021
Wealth ManagementInstitutional and IntermediaryTotalWealth ManagementInstitutional and IntermediaryTotal
 (in thousands)
Blended Asset$14,669 $8,297 $22,966 $13,634 $8,068 $21,702 
Equity1,361 5,921 7,282 1,608 5,865 7,473 
Fixed Income110 469 579 106 395 501 
Total$16,140 $14,687 $30,827 $15,348 $14,328 $29,676 

Accounts Receivable
Accounts receivable as of March 31, 2022 and December 31, 2021 consisted of the following:
 March 31, 2022December 31, 2021
 (in thousands)
Accounts receivable - third parties$5,931 $8,119 
Accounts receivable - affiliated mutual funds and collective investment trusts5,209 5,732 
Total accounts receivable$11,140 $13,851 
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 ninethree months ended September 30, 2017. Incentives reported as a reduction of revenue were $3.3 millionMarch 31, 2022 or 2021.
Advisory and $8.9 million for the three and nine months ended September 30, 2016, respectively.
The Company has agreements with third parties who provide distribution and administrative services for its mutual funds, collective investment trusts and certain separately managed accounts. Third party agreements are evaluated against ASC 605-45 Revenue Recognition - Principal Agent Considerations to determine whether revenue should be reported gross or net of payments to third-party service providers. In management's judgment there are various indicators that support gross revenue reporting, the most notable being the Company acts as primary obligor and therefore principal service provider. Based on this evaluation, investment management service revenue is recorded gross of distribution and administrative fees paid to third parties.
AdvisoryDistribution Agreements
The Company derives significant revenue from its role as advisor toearns investment advisory fees, distribution fees and administrative service fees under agreements with affiliated mutual funds and collective investment trusts. Fees earned for advisory relatedand distribution services provided were approximately $19.4 million and $64.6$10.1 million for the three and nine months ended September 30, 2017, respectively,March 31, 2022 and $28.8 million and $86.7approximately $9.9 million for the three and nine months ended September 30, 2016, respectively,March 31, 2021, which represents greater than 10%25% of the Company's 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 March 31, 2022 and December 31, 2021:
Recent Accounting Pronouncements
 March 31, 2022December 31, 2021
 (in thousands)
Affiliated mutual funds$3,928 $4,309 
Affiliated collective investment trusts1,281 1,423 
Accounts receivable - affiliated mutual funds and collective investment trusts$5,209 $5,732 
In May 2014,
Contract assets and liabilities
Accrued accounts receivable: Accrued accounts receivable represents the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes existing accounting standardsCompany's contract asset for revenue recognition and creates a single framework. The revenue standard contains principals that will be applied to determinehas been recognized in advance of billing separately managed account contracts. Consideration for the measurement of revenue and timing of recognition and also impactsperiod billed in arrears is dependent on the accounting for incremental costs to obtain a contract. We will adopt the new standard on its effective date of January 1, 2018. While we have not identified material changes in the timing of revenue recognition, we continue to evaluate the presentation of certain revenue related costsclient’s AUM on a gross versus net basis. We anticipate that certain first year costs associated with new investment management contracts will be capitalizedfuture billing date and amortized over an estimated customer contract period. We have not yet determined whether we will adopt the standard using the retrospective approach with adjustment to each prior period or modified retrospective approach with the cumulative effect of initial application recognized at the date of initial application.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires all equity investments to be measured at fair value with changes in the fair value recognized through net income. ASU 2016-01 will be effective on January 1, 2018 and will result in a cumulative-effect adjustment to the balance sheet upon adoption. The Company is currently evaluating the impact that ASU 2016-01 will have on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheettherefore conditional as a lease liability and a right-of-use asset (as defined). The new guidance will be effective for fiscal years beginning after December 15, 2018, with earlier application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company is currently evaluating the impact that ASU 2016-02 will have on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Stock Compensation - Stock Compensation (Topic 718),Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment award transactions. The guidance is effective for fiscal years beginning after December 15, 2016. The Company's adoption of these amendments on January 1, 2017 did not have a material impact on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments, to clarify guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. The FASB issued the ASU with the intent of reducing diversity in practice regarding eight types of cash flows. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company is evaluating the effect of adopting this new accounting standard.
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 relativeperiod end. During the three months ended March 31, 2022, revenue was decreased 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 March 31, 2022 and December 31, 2021.
Deferred revenue: Deferred revenue is recorded when consideration is received or unconditionally due in advance of providing services to the reporting unit's carrying amount rather than onCompany's customer. Revenue recognized during the basisthree months ended March 31, 2022 that was included in deferred revenue at the beginning of the implied amount of goodwill relative to the goodwill balance of the reporting unit. The ASU is effective for annual and interim impairment tests for periods beginning after December 15, 2019. Early adoption is allowed for annual and interim impairment tests occurring after January 1, 2017. The Company is evaluating the effect of adopting this new accounting standard.period was approximately $9.9 million.
10

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

Note 3—Acquisitions
On April 30, 2016, the Company acquiredCosts to obtain a majority ownership interestcontract: Under compensation plans in Rainier Investment Management, LLC ("Rainier”),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 active investment management firm. Under the termsestimated customer contract period of the transaction, the Company initially acquired a 75% ownership interest in Rainier, with the remaining 25% ownership maintained by key professionals at Rainier. As of September 30, 2017, the Company's ownership interest in Rainier was 86%, an increase from the acquisition due3 to the forfeiture of unvested ownership interests by certain individuals retiring from Rainier subsequent to the acquisition.
Consideration transferred included an upfront cash payment on the transaction closing date of $13.0 million, a portion of which was held in escrow. During the second quarter of 2017, the Company received approximately $0.3 million from amounts held in escrow for post closing adjustments. Additional cash payments of up to $32.5 million over a four year period are contingent upon Rainier’s achievement of certain annual financial targets.7 years. The fair value of the liability for this contingent consideration recognized on the acquisition date was $3.5 million. As of September 30, 2017 and December 31, 2016, the fair value of this contingent liability was $0.
The transaction was accounted for by the Company using the acquisition method under ASC 805, Business Combinations. During the second quarter of 2016, the Company completed a preliminary allocation of the April 30, 2016 purchase price to the assets acquired and liabilities assumed. During the first quarter of 2017, certain adjustments were recorded to liabilities assumed and the purchase price allocation was finalizedtotal net asset as of March 31, 2017.2022 and December 31, 2021 was approximately $0.4 million and $0.5 million, respectively. The final purchase price was allocated as follows (in thousands):related amortization expense, which is included in compensation and related costs, totaled less than $0.1 million for the three months ended March 31, 2022 and less than $0.1 million for the three months ended March 31, 2021. An impairment loss is recorded for contract acquisition costs related to client contracts that cancel during the period. These impairment losses totaled less than $0.1 million for the three months ended March 31, 2022 and were zero for the three months ended March 31, 2021.
Assets acquired 
Current assets$6,998
Property and equipment, net783
Intangible assets 
Client relationships9,320
Trademarks270
Goodwill3,958
Total assets acquired21,329
Liabilities assumed 
Accounts payable and accrued expenses4,023
Other liabilities1,204
Total liabilities assumed5,227
Purchase price$16,102
Note 4—Noncontrolling Interests
Manning & Napier holds an economic interest of approximately 17.8%97.8% in Manning & Napier Group, butand 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 statementstatements of financial condition with respect to the remaining approximately 82.2% aggregate2.2% economic interest in Manning & Napier Group held by M&N Group Holdings and MNCC.Holdings. 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,
20222021
 (in thousands)
Income before provision for (benefit from) income taxes$478 $6,667 
Less: income (loss) before provision for (benefit from) income taxes of Manning & Napier, Inc. (1)
(1,320)
Income before provision for income taxes, as adjusted1,798 6,660 
Controlling interest percentage (2)
97.8 %88.9 %
Income before provision for income taxes attributable to controlling interest1,758 5,921 
Plus: income (loss) before provision for (benefit from) income taxes of Manning & Napier, Inc. (1)
(1,320)
Income before provision for income taxes attributable to Manning & Napier, Inc.438 5,928 
Less: provision for (benefit from) income taxes of Manning & Napier, Inc.(3)
(748)688 
Net income attributable to Manning & Napier, Inc.$1,186 $5,240 
_______________________
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
  (in thousands)
Income before provision for income taxes $12,591
 $21,550
 $46,279
 $68,651
Less: gain (loss) before provision for income taxes of Manning & Napier, Inc. (1)
 (51) (95) (45) (114)
Income before provision for income taxes, as adjusted 12,642
 21,645
 46,324
 68,765
Controlling interest percentage (2)
 17.8% 17.4% 17.7% 17.1%
Net income attributable to controlling interest 2,261
 3,765
 8,189
 11,753
Plus: gain (loss) before provision for income taxes of Manning & Napier, Inc. (1)
 (51) (95) (45) (114)
Income before income taxes attributable to Manning & Napier, Inc. 2,210
 3,670
 8,144
 11,639
Less: provision for income taxes of Manning & Napier, Inc. (3)
 689
 1,412
 3,041
 4,358
Net income attributable to Manning & Napier, Inc. $1,521
 $2,258
 $5,103
 $7,281
(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 gains 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 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 for the respective periods.
(3)
The consolidated provision for income taxes is equal to the sum of (i) the provision for income taxes for entities other than Manning & Napier, Inc. and (ii) the provision for income taxes of Manning & Napier, Inc. which includes all U.S. federal and state income taxes. The consolidated provision for income taxes was $0.7 million and $3.3 million for the three and nine months ended September 30, 2017, respectively, and $1.6 million and $4.8 million for the three and nine months ended September 30, 2016, 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 benefit of $0.7 million and provision of $0.7 million for the three months ended March 31, 2022 and 2021, respectively.
As of September 30, 2017,March 31, 2022, a total of 63,931,065428,812 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 exchangeabletendered for shares of the Company's Class A common stock.exchange or redemption. For any units exchanged, the Company willmay (i) pay an amount of cash equal to the number of tendered units exchanged 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.
During the nine months ended September 30, 2017, M&N Group Holdings and MNCC exchanged a total of 1,853,506 Class A units of
11

Manning & Napier, Group for approximately $9.8 million in cash. SubsequentInc.
Notes to Consolidated Financial Statements (Continued)
During the exchange the Class A units were retired, resulting in an increase in Manning & Napier's ownership in Manning & Napier Group. In addition, during the ninethree months ended September 30, 2017,March 31, 2022, 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, net of forfeitures of unvested restricted stock awards.






Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

Group.
The following is the impact to the Company's equity ownership interest in Manning & Napier Group for the ninethree months ended September 30, 2017:March 31, 2022:
 Manning & Napier Group Class A Units Held  
 

Manning & Napier
  
Noncontrolling Interests
 Total Manning & Napier Ownership %
As of December 31, 201613,826,575
 65,784,571
 79,611,146
 17.4%
Class A Units issued (1)
46,467
 
 46,467
 —%
Class A Units exchanged
 (1,853,506) (1,853,506) 0.4%
As of September 30, 201713,873,042
 63,931,065
 77,804,107
 17.8%
______________________
(1)The impact of the transaction of Manning & Napier's ownership was less than 0.1%.

Manning & Napier Group Class A Units Held
 
Manning & Napier
 
Noncontrolling Interests
TotalManning & Napier Ownership %
As of December 31, 202118,296,780 428,812 18,725,592 97.7%
Class A Units issued370,252 — 370,252 0.1%
As of March 31, 202218,667,032 428,812 19,095,844 97.8%
Manning & Napier Inc., as managing member, controls all of the business and affairs of Manning & Napier 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 Statementsconsolidated statements of Financial Positionfinancial position are adjusted to reallocate the Company's historical equity to reflect the change in ownership of Manning & Napier Group.
Manning & Napier and the holders of Manning & Napier Group are party to a tax receivable agreement ("TRA"), pursuant to which Manning & Napier is required to pay to such holders 85% of the applicable cash savings, if any, in U.S. federal, state, local and foreign income tax that Manning & Napier actually realizes, or is deemed to realize in certain circumstances, as a result of (i) certain tax attributes of their units sold to Manning & Napier or exchanged (for shares of Class A common stock) and that are created as a result of the sales or exchanges and payments under the TRA and (ii) tax benefits related to imputed interest.
At September 30, 2017both March 31, 2022 and December 31, 2016,2021, the Company had recorded a liability of $34.7$17.8 million, and $37.1 million, respectively, representing the estimated payments due to the selling unit holders under the tax receivable agreement ("TRA")TRA entered into between Manning & Napier and the other holders of Class A Units of Manning & Napier Group. Of these amounts, $2.5 million and $2.4approximately $4.3 million were included in accrued expenses and other liabilities at September 30, 2017both March 31, 2022 and December 31, 2016, respectively.2021. The Company made no payments of $2.4 million and $3.4 million pursuant to the TRA during either of the ninethree months ended September 30, 2017March 31, 2022 and 2016, respectively.2021.
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.
12
Note 5—Investment Securities
The following represents the Company’s investment securities holdings as of September 30, 2017 and December 31, 2016:
  September 30, 2017
  Cost 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
  (in thousands)
Available-for-sale securities        
U.S. Treasury notes $7,117
 $3
 $(13) $7,107
Short-term investments 22,255
 
 
 22,255
        29,362
Trading securities        
Equity securities       2,493
Fixed income securities       5,009
Mutual funds       346
        7,848
Equity method investments        
Mutual funds       1,112
Total investment securities       $38,322

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

Note 5—Investment Securities
The following represents the Company’s investment securities holdings as of March 31, 2022 and December 31, 2021:
 December 31, 2016March 31, 2022
 Cost 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
CostUnrealized
Gains
Unrealized
Losses
Fair
Value
 (in thousands) (in thousands)
Available-for-sale securities        Available-for-sale securities
U.S. Treasury notes $7,093
 $13
 $(6) $7,100
Short-term investments 14,744
 
 
 14,744
U.S. Treasury securitiesU.S. Treasury securities$9,455 $— $(191)$9,264 
Fixed income securitiesFixed income securities6,219 — (204)6,015 
       21,844
Trading securities        
15,279 
Equity investments, at fair valueEquity investments, at fair value
Equity securities       7,176
Equity securities6,796 
Fixed income securities 7,167
Mutual funds       288
Mutual funds14,945 
Mutual funds - consolidated funds       995
       15,626
21,741 
Total investment securities       $37,470
Total investment securities$37,020 
December 31, 2021
CostUnrealized
Gains
Unrealized
Losses
Fair
Value
 (in thousands)
Available-for-sale securities
U.S. Treasury securities$10,442 $— $(135)$10,307 
Fixed income securities7,015 — (156)6,859 
17,166 
Equity investments, at fair value
Equity securities6,377 
Mutual funds1,065 
7,442 
Total investment securities$24,608 
Investment securities are classified as either tradingequity 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 tradingequity investments, at fair value consist of equity securities, fixed income securities and investments in mutual funds for which the Company provides advisory services. At September 30, 2017March 31, 2022 and December 31, 2016, trading securities2021, equity investments, at fair value consist solely of investments held by the Company to provide initial cash seeding for product development purposes.purposes and investments in mutual funds to hedge economic exposure to market movements on its deferred compensation plan. The Company recognized approximately $1.5$0.5 million of net unrealized losses and $1.6$0.3 million of net unrealized gains related to investments classified as tradingequity investments, at fair value during the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, respectively.
Investment securities classified as available-for-sale consist of U.S. Treasury notessecurities and other short-term investmentscorporate bonds to optimize cash management opportunities and for compliance with certain regulatory requirements and to optimize cash management opportunities.requirements. As of September 30, 2017March 31, 2022 and December 31, 2016,2021, 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. No other-than-temporary impairment charges have been recognized by the Company during the ninethree months endedSeptember 30, 2017 March 31, 2022 and 2016.2021.
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 providedapplied 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).
13

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).
Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

The following providestable summarizes the hierarchy of inputs used to derive the fair value of the Company’s financial instruments measured at fair value on a recurring basisassets as of September 30, 2017March 31, 2022 and December 31, 2016:2021:
March 31, 2022
Level 1Level 2Level 3Totals
 (in thousands)
Equity securities$6,796 $— $— $6,796 
Fixed income securities— 6,015 — 6,015 
Mutual funds14,945 — — 14,945 
U.S. Treasury securities— 9,264 — 9,264 
Total assets at fair value$21,741 $15,279 $— $37,020 
 September 30, 2017December 31, 2021
 Level 1 Level 2 Level 3 TotalsLevel 1Level 2Level 3Totals
 (in thousands) (in thousands)
Equity securities $2,493
 $
 $
 $2,493
Equity securities$6,377 $— $— $6,377 
Fixed income securities 
 5,009
 
 5,009
Fixed income securities— 6,859 — 6,859 
Mutual funds 1,458
 
 
 1,458
Mutual funds1,065 — — 1,065 
U.S. Treasury notes 
 7,107
 
 7,107
Short-term investments 22,255
 
 
 22,255
U.S. Treasury securitiesU.S. Treasury securities— 10,307 — 10,307 
Total assets at fair value $26,206
 $12,116
 $
 $38,322
Total assets at fair value$7,442 $17,166 $— $24,608 
        
Contingent consideration liability $
 $
 $
 $
Total liabilities at fair value $
 $
 $
 $
  December 31, 2016
  Level 1 Level 2 Level 3 Totals
  (in thousands)
Equity securities $7,176
 $
 $
 $7,176
Fixed income securities 1,071
 6,096
 
 7,167
Mutual funds 288
 
 
 288
Mutual funds - consolidated funds 995
 
 
 995
U.S. Treasury notes 
 7,100
 
 7,100
Short-term investments 14,744
 
 
 14,744
Total assets at fair value $24,274
 $13,196
 $
 $37,470
         
Contingent consideration liability $
 $
 $
 $
Total liabilities at fair value $
 $
 $
 $

Short-term investments consists of certificate of deposits ("CDs") that are stated at cost, which approximate fair value due to the short maturity of the investments.
Valuations of investments in fixed income securities and U.S. Treasury notessecurities 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.
Contingent consideration was a component of the purchase price of Rainier (Note 3). The contingent consideration is payable over a four year period upon Rainier’s achievement of certain financial targets. The fair value of the contingent consideration is calculated on a quarterly basis by forecasting Rainier’s adjusted earnings before interest, taxes and amortization ("EBITA") as defined by the purchase agreement over the contingency period with changes in the fair value included in other operating costs in the consolidated statements of operations.
There were no changes in contingent consideration liability measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2017. The fair value was $0 at September 30, 2017 and December 31, 2016.
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 Levelsvaluation levels during the ninethree months ended September 30, 2017.March 31, 2022.
Note 7—Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities as of March 31, 2022 and December 31, 2021 consisted of the following:
March 31, 2022December 31, 2021
 (in thousands)
Accrued bonus and sales commissions$11,182 $22,144 
Accrued payroll and benefits2,953 4,548 
Accrued sub-transfer agent fees472 482 
Amounts payable under tax receivable agreement4,273 4,273 
Short-term operating lease liabilities2,788 2,728 
Other accruals and liabilities4,320 2,213 
Total accrued expenses and other liabilities$25,988 $36,388 
14

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

Note 8—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.
Certain of the Company's operating leases have been subleased for which the Company will receive cash totaling approximately $4.1 million over the remaining term of such leases. The lease terms for the five subleased operating leases end ranging from 2025 to 2028.
The components of lease expense for the three months ended March 31, 2022 and 2021 were as follows:
Three months ended March 31,
20222021
(in thousands)
Finance lease expense
Amortization of right-of-use assets$13 $24 
Interest on lease liabilities
Operating lease expense1,183 826 
Short-term lease expense— — 
Variable lease expense77 41 
Sublease income(186)(165)
Total lease expense$1,088 $728 


Supplemental cash flow information related to leases for the three months ended March 31, 2022 and 2021 were as follows:
Three months ended March 31,
20222021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$$
Finance cash flows from finance leases$17 $16 
Operating cash flows from operating leases$1,189 $946 
Right-of-use assets obtained in exchange for new lease obligations:
Finance leases$— $— 
Operating leases$(513)$38 
15

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)
Supplemental balance sheet information related to leases as of March 31, 2022 was as follows:
(in thousands, except lease term and discount rate)March 31, 2022
Finance Leases
Finance lease right-of-use assets (1)
$67 
Accrued expenses and other liabilities$44 
Other long-term liabilities28 
Total finance lease liabilities$72 
Operating Leases
Operating lease right-of-use assets$12,999 
Accrued expenses and other liabilities$2,788 
Operating lease liabilities, non-current12,708 
Total operating lease liabilities$15,496 
Weighted average remaining lease term
Finance leases1.56 years
Operating leases5.45 years
Weighted average discount rate
Finance leases4.29 %
Operating leases4.95 %
_______________________
(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 LeasesOperating Leases
(in thousands)
2023$47 $3,524 
202427 3,292 
2025— 3,171 
2026— 2,906 
2027— 2,871 
Thereafter— 1,924 
Total lease payments74 17,688 
Less imputed interest(2)(2,192)
Total lease liabilities$72 $15,496 
Note 7—Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities as of September 30, 2017 and December 31, 2016 consisted of the following:
  September 30, 2017 December 31, 2016
  (in thousands)
Accrued bonus and sales commissions $11,471
 $18,342
Accrued payroll and benefits 3,705
 3,430
Accrued sub-transfer agent fees 3,000
 4,785
Dividends payable 1,203
 2,397
Amounts payable under tax receivable agreement 2,475
 2,364
Other accruals and liabilities 3,755
 3,797
Total accrued expenses and other liabilities $25,609
 $35,115
Note 8—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 of one or more of the Manning & Napier Group entities.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.
16

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., National Futures Association and U.S. Commodity Futures Trading Commission. 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 be subject to 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, 2017March 31, 2022 and December 31, 2016,2021, the Company has not accrued for any such claims, legal proceedings, or other contingencies.
Merger Agreement
The Company has made customary representations and warranties in the Merger Agreement with Callodine (Note 1). The Merger Agreement also contains customary covenants and agreements, including covenants and agreements relating to the conduct of the Company’s business between the date of the signing of the Merger Agreement and the closing of the transactions contemplated under the Merger Agreement.
The Merger Agreement contains certain termination rights for the Company and Callodine, including the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company, the Company will be required to pay Callodine a termination fee of $8,790,000 or upon termination of the Merger Agreement by Callodine, Callodine will be required to pay the Company a termination fee of $15,070,000 in each case under circumstances.
In addition to the foregoing termination rights, and subject to certain limitations, either party may terminate the Merger Agreement if the Merger is not consummated by October 1, 2022.
Note 9—10—Earnings per Common Share
Basic earnings per share (“basic EPS”) is computed usingby dividing net income by the two-class methodweighted average number of shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect during the reporting period to determineother potentially dilutive shares outstanding.
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. The two-class method includes an earnings allocation formula that determines earnings per share
Weighted average shares outstanding for each participating security accordingperiods prior to dividends declared and undistributed earnings forJanuary 1, 2022 reflect the period. Theimpact of the Company's restricted Class A common shares that had been granted under the Equity Plan havea prior equity plan. These awards had non-forfeitable dividend rights during their vesting period and arewere 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 numberfor purposes of common shares outstanding during the period.
Dilutedcomputing both basic and 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 the unvested equity awards and the exchangeable units of Manning & Napier Group, to the extent that such conversion would dilute earnings per share.in those periods.
17

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 earnings per shareEPS computations for the three and nine months endedSeptember 30, 2017 March 31, 2022 and 2016 under2021:
Three months ended March 31,
20222021
 (in thousands, except share data)
Numerator:
Net income attributable to controlling and noncontrolling interests$1,224 $5,964 
Less: net income attributable to noncontrolling interests38 724 
Net income attributable to Manning & Napier, Inc.$1,186 $5,240 
Less: allocation to participating securities— 38 
Net income available to Class A common stock for basic EPS$1,186 $5,202 
Plus: reallocation of net income attributable to participating securities— 
Net income available to Class A common stock for diluted EPS$1,186 $5,207 
Denominator:
Weighted average shares of Class A common stock outstanding - basic18,988,573 17,026,500 
Dilutive effect of outstanding equity awards2,563,364 3,246,843 
Weighted average shares of Class A common stock outstanding - diluted21,551,937 20,273,343 
Net income available to Class A common stock per share - basic$0.06 $0.31 
Net income available to Class A common stock per share - diluted$0.06 $0.26 
Performance-based stock options are excluded from the two-class method:
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
  (in thousands, except share data)
Net income attributable to controlling and noncontrolling interests $11,852
 $19,985
 $42,955
 $63,867
Less: net income attributable to noncontrolling interests 10,331
 17,727
 37,852
 56,586
Net income attributable to Manning & Napier, Inc. $1,521
 $2,258
 $5,103
 $7,281
Less: allocation to participating securities 83
 158
 288
 480
Net income available to Class A common stock $1,438
 $2,100
 $4,815
 $6,801
         
Weighted average shares of Class A common stock outstanding - basic 14,249,347
 14,042,880
 14,135,288
 13,916,721
Dilutive effect of unvested equity awards 23,388
 132,441
 106,354
 256,562
Dilutive effect of exchangeable Class A Units 63,937,284
 
 
 
Weighted average shares of Class A common stock outstanding - diluted 78,210,019
 14,175,321
 14,241,642
 14,173,283
Net income available to Class A common stock per share - basic $0.10
 $0.15
 $0.35
 $0.49
Net income available to Class A common stock per share - diluted $0.10
 $0.15
 $0.35
 $0.48
The Company’s Class B common stock represents voting interests and does not participate in the earningscalculation of the Company. Accordingly, there is no basic or diluted EPS related tofor periods in which the Company’s Class B common stock.associated market condition has not yet been achieved. As such, for the three months ended March 31, 2021, 288,000 unvested performance-based stock options were excluded from the calculation of diluted EPS.
For both the three and nine months ended September 30, 2017, 790,000March 31, 2021, 232,216 unvested equity awards were excluded from the calculation of diluted earnings per common share because the effect would have been anti-dilutive. For both the three and nine months ended September 30, 2016, 990,000 unvested equity awards were excluded from the calculation of diluted earnings per common shareEPS because the effect would have been anti-dilutive.
At September 30, 2017March 31, 2022, and 2021 there were 63,931,065428,812 and 2,021,781 Class A Units of Manning & Napier Group outstanding, respectively, 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 ninethree months ended September 30, 2017,March 31, 2022 or for the three months ended March 31, 2021 because the effect would have been anti-dilutive.
At September 30, 2016 there were 65,784,571 Class A Units of Manning & Napier Group outstanding, which were not included in the calculation of diluted earnings per common share for the three and nine months ended September 30, 2016, because the effect would have been anti-dilutive.
Note 10—Equity Based11—Equity-Based Compensation
The Equity Plan was adopted by the Company's board of directors and approved by stockholdersshareholders prior to the consummation of the Company's 2011 initial public offering. Under the Equity Plan, aA total of 13,142,813 equity interests arewere authorized for issuance, and mayeligible to 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.
The Equity Plan expired in November 2021. As such, at March 31, 2022, there were no awards available for issuance pursuant to the Equity Plan.The following table summarizes the award activity for the nine months ended September 30, 2017related to awards of restricted stock and restricted stock units (collectively, "stock awards") under the Equity Plan:Plan for the three months ended March 31, 2022:
Stock AwardsWeighted Average Grant Date Fair Value
Outstanding at January 1, 20223,421,611 $2.90 
Granted— $— 
Vested(581,595)$1.57 
Forfeited(19,737)$1.57 
Outstanding at March 31, 20222,820,279 $3.19 
The weighted average fair value of stock awards granted during the three months ended March 31, 2021 was $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.
18
  
Restricted
Stock Awards
 Weighted Average Grant Date Fair Value
Stock awards outstanding at January 1, 2017 1,207,788
 $12.56
Granted 70,399
 $5.55
Vested (276,064) $12.41
Forfeited (150,000) $12.20
Stock awards outstanding at September 30, 2017 852,123
 $12.09

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

For the three and nine months ended September 30, 2017,March 31, 2022 and 2021, the Company recorded approximately $0.3$0.5 million and $1.7$1.2 million, respectively, of compensation expense related to stock awards under the Equity Plan. ForThe aggregate intrinsic value of stock awards that vested during each of the three and nine months ended September 30, 2016, the Company recordedMarch 31, 2022 and 2021 was approximately $0.4$4.6 million and $2.5$0.5 million, respectively, of compensation expense related to awards under the Equity Plan.respectively. As of September 30, 2017,March 31, 2022, there was unrecognized compensation expense of approximately $6.9 million related to Equity Planstock awards, of approximately $5.8 million, which the Company expects to recognize over a weighted average period of approximately 3.53.4 years.
DuringA summary of activity under the nineEquity Plan related to stock option awards during the three months ended September 30, 2017 and 2016,March 31, 2022 is presented below:
Stock Option AwardsWeighted Average Exercise PriceWeighted Average Contractual Term
(years)
Aggregate
Intrinsic
 Value
 (in thousands)
Outstanding at January 1, 2022500,000 $2.01 
Granted— $— 
Exercised— $— 
Forfeited— $— 
Outstanding at March 31, 2022500,000 $2.01 3.4$3,550 
Exercisable at March 31, 2022500,000 $2.01 3.4$3,550 
For the three months ended March 31, 2021, the Company recorded approximately $0.1 million of compensation expense related to stock options under the Equity Plan. As of March 31, 2022, there was no unrecognized compensation expense related to stock options.
In connection with the vesting of restricted stock units during the three months ended March 31, 2022, the Company withheld a total of 69,597 and 111,729 restricted211,343 shares respectively, as a result of net share settlementsClass A common stock to satisfy approximately $1.7 million of employee income tax withholding obligations. The Company paid approximately $0.3 million and $1.0 million in employee tax withholding obligations related to these settlements during the nine months ended September 30, 2017 and 2016, respectively.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.
Note 11—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 LLC’sLLCs 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.
In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate 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 beginning of the fiscal year and at each interim period thereafter.
The Company’s income tax provision (benefit) and effective tax rate were as follows:
 Three months ended March 31,
 20222021
 (in thousands)
Income before provision for (benefit from) income taxes$478 $6,667 
Effective tax rate(156.1)%10.5 %
Provision for (benefit from) income taxes(746)703 
Provision for income taxes at statutory rate100 1,400 
Difference between tax at effective vs. statutory rate$(846)$(697)
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
  (in thousands)
Earnings from continuing operations before income taxes $12,591
 $21,550
 $46,279
 $68,651
Effective tax rate 5.9% 7.3% 7.2% 7.0%
Provision for income taxes 739
 1,565
 3,324
 4,784
Provision for income taxes @ statutory rate 4,281
 7,543
 15,735
 24,028
Difference between tax at effective vs. statutory rate $(3,542) $(5,978) $(12,411) $(19,244)
For the three and nine months endedSeptember 30, 2017 and 2016, the difference between the Company’s recordedThe provision and the provision that would result from applying the U.S. statutory rate of 34% and 35%, respectively, is primarilyfor (benefit from) income taxes includes a benefit attributable to the benefit resulting from 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 portion of the Company’s earnings are not subject to corporate level taxes. The Company recognized a reduced benefit from flow-through entities during the three months ended March 31, 2022 compared to March 31, 2021 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, 2022 compared to March 31, 2021.
19

Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)
The effective rate during the three months ended March 31, 2022 and 2021 is lower than the statutory rate of 21% due to the incremental tax benefits realized from the vesting of restricted stock units during the first quarters of 2022 and 2021 and exercise of stock options during the first quarter of 2021, partially offset by the impacts from permanent differences between book and tax income, including but not limited to Section 162(m) of the IRC which limits the annual amount of deductible compensation.
Note 12—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 including William Manning.and directors and/or their affiliated entities. Pursuant to the respective investment management agreements, in some instances the Company waivesmay waive or reducesreduce its regular advisory fees for these accounts and personal funds utilized to incubate products.accounts. The aggregate value of the fees earned was approximately $0.2 million and the value of the fees waived was approximately $0.1 million for the nine months ended September 30, 2017. The aggregate value of the fees earned was approximately $0.1 million and the value of the fees waived was less than $0.1 million for each of the ninethree months ended September 30, 2016.March 31, 2022 and 2021. No fees were waived for the three months ended March 31, 2022 and 2021.
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. The aggregate value of revenueFees earned wasfor advisory and distribution services provided were approximately $19.4 million and $64.6$10.1 million for the three and nine months ended September 30, 2017, respectively,March 31, 2022, and $28.8 million and $86.7$9.9 million for the three and nine months ended September 30, 2016,March 31, 2021. Fees earned for administrative services provided were approximately $0.3 million for the three months ended March 31, 2022, and $0.2 million for the three months ended March 31, 2021, respectively. AsSee Note 3 for disclosure of September 30, 2017 and December 31, 2016, amounts due from the affiliated mutual funds was approximately $6.2 million and $6.8 million, respectively. As of September 30, 2017 and December 31, 2016, amounts due from affiliated mutual funds and collective investment trusts was approximately $2.1 million and $4.5 million, respectively.
Manning & Napier, Inc.
Notes to Consolidated Financial Statements (Continued)

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 was $4.1 million and $3.4were approximately $0.6 million for the ninethree months ended September 30, 2017March 31, 2022, and 2016, respectively.$0.5 million for the three months ended March 31, 2021.
Note 13—14—Subsequent Events
Distributions and dividendsDistribution
On October 24, 2017,April 20, 2022, the Company's Board of Directors approved a $2.0 million distribution from Manning & Napier Group to Manning & Napier and the noncontrolling interests of Manning & Napier Group. The amountGroup, of which less than $0.1 million was paid to the distribution will be basednoncontrolling members of Manning & Napier Group.
Dividend on earnings forClass A common stock
On April 20, 2022, the quarter ended December 31, 2017, with a maximum amount of $10.0 million. Concurrently, theCompany's Board of Directors declared an $0.08a $0.05 per share dividend to the holders of Class A common stock. The dividend is payable on or about February 1, 2018May 20, 2022 to shareholders of record as of January 15, 2018.May 6, 2022.

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Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.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 ourthe 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," "would," "should," "could," "intends," "likely," "plans,"outlook," 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 disclosed in the “Risk Factors” section, as well as other sections, of our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, which include, without limitation: the delay in or failure to consummate the merger with Callodine Group, LLC ("Callodine"); changes in our business related to the merger with Callodine; changes in securities or financial markets or general economic conditions;conditions, including as a result of the COVID-19 pandemic or political instability and uncertainty, such as the Russian invasion of Ukraine; inflation; changes in interest rates; 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.
Overview
Our Business
We areManning & Napier, Inc. is an independent investment management firm that provides our clients with a broad range of financial solutions and investment solutions, as well as a variety of consultative services that complement our investment process.strategies. Founded in 1970 we offer U.S. and non-U.S equity, fixed income, and a range of blended asset portfolios, such as life cycle funds and exchange-traded fund ("ETF")-based portfolios. Weheadquartered in Fairport, New York, we serve a diversified client base of high net worthhigh-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, including life cycle funds.
Impact of COVID-19
We are 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.
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, are based principally insee the United States, with"Risk Factors" section of our headquarters located in Fairport, New York.Annual Report on Form 10-K.
Market Developments
FinancialU.S. equity markets specificallystarted the year from a place of all-time highs before stumbling out of the gate and hitting correction territory in early-February. Investors reacted with caution to a combination of rising inflation, tightening financial conditions, and the Russia-Ukraine invasion. Equity markets later rallied, recovering some of the lost ground, but remain off their highs for the year. Overall, market valuations softened incrementally due to market weakness and robust earnings growth; however, equities remain expensive by longer-term historical standards.
Fixed income performance was also challenged as short- to intermediate-term rates rapidly rose, inverting segments of the yield curve. An inversion does not guarantee a recession, but it is of concern as yield curve inversions have historically occurred late in economic cycles. Additionally, inflation is adding further pressure on fixed income as it continues to measure well above levels of recent cycles. In response, the Federal Reserve implemented its first rate hike in March, as well as suggested a quicker pace of monetary policy tightening going forward, signifying a later start to policy normalization. It remains to be seen whether the Fed will need to be more aggressive to adequately address the inflation problem.
As the economy progresses into a later cycle phase, we will continue monitoring the ongoing logistical hurdles constraining supply chains, wage growth data as it reflects a hotter labor market, and corporate credit spreads, which remain compressed due to excess liquidity and generally low rates. The building risks and pressures outlined above, paired with the current ten year bullstate of the market have had a significant impact on asset flowsand economy, has led our outlook to become incrementally more cautious, and we are de-risking where applicable.
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Table of Contents
Business Updates
On March 31, 2022, the Company entered into an agreement (the "Merger Agreement") under which the Company will go private and be acquired by Callodine, with the Company continuing as the surviving corporation (the "Merger").
Pursuant to the Merger Agreement, each outstanding share of common stock of the Company and Manning & Napier Group Holdings outstanding units will be converted into the right to receive from Callodine $12.85 in cash. The proposed acquisition is expected to close in the third quarter of 2022, contingent upon shareholder approval and other customary closing conditions. For additional information about the proposed Merger and the market value of our assets under management ("AUM"). Though our relative returns have been competitive forMerger Agreement, please see the nine months ended September 30, 2017Company’s Current Report on Form 8-K filed with the U.S. Securities and have helped repair our longer-term track records, the one, three, and five year annualized returns for many of our key investment strategies have trailed their related benchmarks in recent years. In addition, we have experienced increased competition as a result of lower fee passive investment products which have gained popularity over the last decade, such as index funds and ETFs.
As a result of these factors, we have experienced net client outflows since 2013 resulting in an overall decrease in our AUM, which is likely to continue in the near term, though at a slower rate of decrease. Additionally, we expect that AUM will decrease approximately $0.4 billion in the fourth quarter of 2017 as a result of the anticipated sale of the Rainier Investment Management U.S. product set. Our ability to increase AUM in the future will depend in partExchange Commission on our ability to execute our investment strategies to achieve competitive investment returns, and on our ability to successfully distribute our products and services, including those that have been areas of strategic focus for us.April 1, 2022.
Our strategic initiatives are focused on gathering and retaining client assets. In response to industry trends and increasing fee pressure from passive strategies offered by our competitors, management is evaluating fees across our product set, including restructuring fees across many of our mutual fund and collective trust products. Management fee reductions and corresponding distribution and shareholder servicing expense reductions for the various series of our funds will be rolled out beginning during the fourth quarter of 2017 and continuing through the first half of 2018. 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 assets in the future.
Additionally, we are actively marketing our Custom Solution program. Custom Solution is a competitively priced consultative advisory service in which we tailor an allocation among proprietary and non-proprietary investment products and vehicles to meet a client’s unique investment objectives and cash flow needs. Direct advisory services such as Custom Solution are an essential part of our strategy to pursue direct relationships with clients built on managing risk and meeting investment objectives over market cycles. 
Our ProductsSolutions
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 MNA,Manning & Napier Advisors, LLC ("MNA"), the Manning & Napier Fund, Inc. (the "Fund"), Exeter Trust Company, and Rainier Investment Management.

Management, LLC ("Rainier").
Our separate accounts are primarily distributed through our Direct Channel,wealth management sales channel, where our representativesfinancial consultants form relationships with high net worthhigh-net-worth individuals, middle market institutions or large institutions that are working with a consultant.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 Channelintermediary sales channel, where national brokerage firm representatives or independent financial advisors select our separate account strategies for their clients, or through our Platform/Sub-Advisory Channel,platform/sub-advisor relationships, where unaffiliated registered investment advisors approve our strategies for their product platforms. Our separate account productsstrategies are a primary driver of our blended asset portfolios for high net worth,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 primarily 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 direct salesinstitutional representatives, in particularparticularly within the defined contribution, Taft-Hartley, and institutional marketplace. Our mutual fund and collective investment trust productsstrategies are an important driver of both our blended asset class and single asset class portfolios.
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Assets Under Management
Our AUM was $26.5 billionsales efforts 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 of September 30, 2017.well as larger institutions and Taft-Hartley clients. The table below reflects the estimated composition of our assets under management ("AUM") as of March 31, 2022, by sales channel and investment portfolio:
 March 31, 2022
Blended
Asset
EquityFixed IncomeTotal
 (dollars in millions)
Total AUM
Wealth Management$7,980.2 $972.9 $221.7 $9,174.8 
Institutional and Intermediary6,132.1 4,479.1 863.2 11,474.4 
Total$14,112.3 $5,452.0 $1,084.9 $20,649.2 
Percentage of AUM
Wealth Management38 %%%44 %
Institutional and Intermediary30 %22 %%56 %
Total68 %27 %%100 %
Percentage of portfolio by channel
Wealth Management57 %18 %20 %44 %
Institutional and Intermediary43 %82 %80 %56 %
Total100 %100 %100 %100 %
Percentage of channel by portfolio
Wealth Management87 %11 %%100 %
Institutional and Intermediary53 %39 %%100 %
Our wealth management channel represented 44% of our total AUM as of March 31, 2022. Blended portfolios are the most significant portion of wealth management assets, representing 87%, while equity and fixed income portfolios represent 11% and 2%, respectively.
Our institutional and intermediary channel represented 56% of our total AUM as of March 31, 2022. Blended portfolios are also the largest portion of institutional and intermediary assets at 53% of AUM, followed by vehicleequity and fixed income portfolios at 39% and 8%, respectively.
As of March 31, 2022, blended portfolios account for 68% of our total AUM at $14.1 billion, a 6% decrease from December 31, 2021 when blended assets were $15.1 billion. Blended portfolio AUM is illustratedsplit across distribution channels, with 57% in wealth management and 43% in institutional and intermediary. Equity portfolios account for 27% of our total AUM, at $5.5 billion, a 14% decrease from December 31, 2021 when equity portfolios were at $6.4 billion. Of equity portfolio AUM, 82% is in the table below:
  September 30, 2017
AUM - by investment vehicle and portfolio 
Blended
Asset
 Equity Fixed Income Total
  (in millions)
Separately managed accounts $10,728.4
 $5,412.4
 $1,219.5
 $17,360.3
Mutual funds and collective investment trusts 5,651.7
 3,425.0
 108.8
 9,185.5
Total $16,380.1
 $8,837.4
 $1,328.3
 $26,545.8
The composition of our separately managed accounts as of September 30, 2017, byinstitutional and intermediary channel, and portfolio,18% is set forth in the table below:wealth management channel. Fixed income portfolios account for 5% of total AUM at $1.1 billion, a 1% increase from December 31, 2021. The majority of fixed income assets come through the institutional and intermediary channel at 80%, and 20% in the wealth management channel.
  September 30, 2017
  
Blended
Asset
 Equity Fixed Income Total
  (dollars in millions)
Separate account AUM        
Direct Channel $8,167.8
 $3,789.4
 $1,081.9
 $13,039.1
Intermediary Channel 2,554.8
 717.5
 137.6
 3,409.9
Platform/Sub-advisor Channel 5.8
 905.5
 
 911.3
Total $10,728.4
 $5,412.4
 $1,219.5
 $17,360.3
Percentage of separate account AUM        
Direct Channel 47% 22% 6% 75%
Intermediary Channel 15% 4% 1% 20%
Platform/Sub-advisor Channel 0% 5% % 5%
Total 62% 31% 7% 100%
Percentage of portfolio by channel        
Direct Channel 76% 70% 89% 75%
Intermediary Channel 24% 13% 11% 20%
Platform/Sub-advisor Channel 0% 17% % 5%
Total 100% 100% 100% 100%
Percentage of channel by portfolio        
Direct Channel 63% 29% 8% 100%
Intermediary Channel 75% 21% 4% 100%
Platform/Sub-advisor Channel 1% 99% % 100%
Our separate accountsDuring the three months ended March 31, 2022, our wealth management sales channel contributed 47%33% of our total gross client inflows, forwhile our institutional and intermediary channel contributed 67%. Of the nine months ended September 30, 2017 and represented 65% of our total AUM as of September 30, 2017.

Our separate account business has historically been driven primarily by our Direct Channel, where sales representatives form a relationship with high net worth investors, middle market institutions, and large institutional clients working$0.7 billion in conjunction with a consultant. The Direct Channel contributed 66% of the total gross client inflows, for our separate account business for the nine months ended September 30, 2017 and represented 75% of our total separate account AUM as of September 30, 2017. We anticipate the Direct Channel to continue to be the largest driver of new separate account business going forward, given the Direct Channel’s high net worth and middle market institutional client-type focus.
During the nine months ended September 30, 2017, blended asset portfolios represented 68% of the separate account gross client inflows from the Direct Channel,59%, while equity and fixed income portfolios each represented 16%. As of September 30, 2017, blended asset24% and equity portfolios represented 63% and 29%17%, respectively, of total Direct Channel separate account AUM, while our fixed income portfolios were 8%. We expect our focus on individuals and middle market institutions to continue to drive interest in our blended asset class portfolios, where we provide a comprehensive portfolio of stocks and bonds managed to a client’s specific investment objectives. Our relationships with larger institutions may also be a driver of growth in separately managed account equity strategies, though many of these larger institutions may seek exposure to non-U.S. equity strategies through commingled vehicles rather than separately managed accounts to limit related custody expenses.
To a lesser extent, we also obtain separate account business from third parties, including financial advisors or unaffiliated registered investment advisor programs or platforms. During the nine months ended September 30, 2017, 20% of the total gross client inflows for separate accounts came from financial advisor representatives (Intermediary Channel), and an additional 13% came from registered investment advisor platforms (Platform/Sub-advisor Channel). The Intermediary and Platform/Sub-advisor Channels represented 25% of our total separate account AUM as of September 30, 2017.
New separate account business through the Intermediary Channel flowed into both our blended asset and equity portfolios, driven by advisors’ needs to identify either a one-stop solution (blended asset portfolio) or to fill a mandate within a multi-strategy portfolio. During the nine months ended September 30, 2017, blended asset and equity portfolios represented 50% and 22%, respectively, of the separate account gross client inflows from the Intermediary Channel. As of September 30, 2017, 75% of our separate account AUM derived from financial advisors was allocated to blended asset portfolios, with 21% allocated to equity and 4% allocated to fixed income. We expect that equity and fixed income portfolios may see additional interest from financial advisors over time as more advisors structure a multi-strategy portfolio for their clients.
During the nine months ended September 30, 2017, 99% of our separate account gross client inflows from the Platform/Sub-advisory Channel were into equity portfolios. Gross client inflows through the Platform/Sub-advisor Channel are primarily directed to our equity strategies, where we are filling a specific mandate within the investment program or platform product.
Our annualized separate account retention rate across all channels was 80% during the nine months ended September 30, 2017, a decrease from our historical retention rate, which was 85% for the twelve months ended December 31, 2016.
The composition of our mutual fund and collective investment trust AUM as of September 30, 2017, by portfolio, is set forth in the table below:respectively.
23
  September 30, 2017
  
Blended
Asset
 Equity Fixed Income Total
  (in millions)
Mutual fund and collective investment trust AUM $5,651.7
 $3,425.0
 $108.8
 $9,185.5

Our mutual funds and collective investment trusts contributed 53%
Table of our total gross client inflows for the nine months ended September 30, 2017 and represented 35% of our total AUM as of September 30, 2017. As of September 30, 2017, our mutual fund and collective investment trust AUM consisted of 62% from blended asset portfolios and 37% from equity portfolios compared to 68% and 31% for blended asset and equity portfolios as of September 30, 2016. During the nine months ended September 30, 2017, 71% and 26% of the gross client inflows were attributable to blended assets and equity portfolios, respectively.Contents
Our mutual fund and collective investment trust business is driven by both financial intermediaries and direct sales representatives. Intermediary distribution of our mutual fund and collective investment trust vehicles is achieved via financial advisors, brokers and retirement plan advisors. Through our Intermediary Channel, we are focused on our blended asset life cycle fund vehicles given our emphasis on advisors who work with retirement plans. Our blended asset portfolios are also used by advisors seeking a multi-asset class solution for their retail clients. In addition, we are focused on equity and fixed income portfolios within the Intermediary Channel for intermediaries who wish to use our mutual funds as a component of a larger portfolio.

We also have relationships with consultants and manager research teams at platforms in order to distribute our funds within advisory programs, or through placement on platforms' approved lists of funds. To facilitate our relationships with intermediaries, we currently have approximately 285 dealer relationships. These relationships are important to our retail business as well as our 401(k) life cycle and institutional business.
Through the Direct Channel, we also form relationships with middle market and large market defined contribution plan sponsors seeking to use our life cycle mutual funds and collective investment trusts as default options on their investment menu. Our Direct Sales Representatives also distribute our equity portfolios to large institutional clients with which we have direct relationships and often, the client's consultant. We expect this channel to focus on distributing blended asset and equity portfolio funds in the future.
Results of Operations
Below is a discussion of our consolidated results of operations for the three and nine months ended September 30, 2017March 31, 2022 and 2016.2021.
Components of Results of Operations
Overview
An important factorOne of the most significant factors influencing inflowsnet 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 varietystrategies to exhibit portfolio positioning that is notably divergent from benchmarks and common market indices. We believe this is a strength of stock selectionour 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 absolute pricing discipline and active asset allocation management approach generallyoften differs from many others in the industry, potentially causing the results 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 likelyof 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 investment vehiclessales channels for the three and nine months ended September 30, 2017March 31, 2022 and 2016:
2021:
Sales Channel (4)
Separately
managed
accounts
 
Mutual funds
and collective
investment
trusts
 Total 
Separately
managed
accounts
 
Mutual funds
and collective
investment
trusts
 Total
  (in millions)        
As of June 30, 2017$17,714.9
 $9,360.6
 $27,075.5
 65% 35% 100%
Wealth ManagementInstitutional and IntermediaryTotalWealth ManagementInstitutional and IntermediaryTotal
 (in millions)    
As of December 31, 2021As of December 31, 2021$9,776.9 $12,765.7 $22,542.6 43 %57 %100 %
Gross client inflows (1)
407.2
 393.4
 800.6
      
Gross client inflows (1)
242.0 486.4 728.4 
Gross client outflows (1)
(1,383.4) (928.2) (2,311.6)      
Gross client outflows (1)
(330.0)(1,007.8)(1,337.8)
Market appreciation/(depreciation) & other (2)
621.6
 359.7
 981.3
      
Market appreciation/(depreciation) & other (2)
(514.1)(769.9)(1,284.0)
As of September 30, 2017$17,360.3
 $9,185.5
 $26,545.8
 65% 35% 100%
As of March 31, 2022As of March 31, 2022$9,174.8 $11,474.4 $20,649.2 44 %56 %100 %
Average AUM for period$17,707.0
 $9,294.0
 $27,001.0
      Average AUM for period$9,381.6 $11,949.3 $21,330.9 
           
As of June 30, 2016$20,585.0
 $15,131.2
 $35,716.2
 58% 42% 100%
As of December 31, 2020As of December 31, 2020$8,906.4 $11,213.0 $20,119.4 44 %56 %100 %
Gross client inflows (1)
374.6
 752.2
 1,126.8
      
Gross client inflows (1)
224.8 401.6 626.4 
Gross client outflows (1)
(1,226.0) (2,163.2) (3,389.2)      
Gross client outflows (1)
(305.3)(453.5)(758.8)
Market appreciation/(depreciation) & other (2)
803.4
 561.3
 1,364.7
      
As of September 30, 2016$20,537.0
 $14,281.5
 $34,818.5
 59% 41% 100%
Market appreciation/(depreciation) & other (2)(3)
Market appreciation/(depreciation) & other (2)(3)
391.6 761.2 1,152.8 
As of March 31, 2021As of March 31, 2021$9,217.5 $11,922.3 $21,139.8 44 %56 %100 %
Average AUM for period$20,678.1
 $14,767.5
 $35,445.6
      Average AUM for period$8,993.0 $11,454.3 $20,447.3 
           
Separately
managed
accounts
 
Mutual funds
and collective
investment
trusts
 Total 
Separately
managed
accounts
 
Mutual funds
and collective
investment
trusts
 Total
 
 (in millions)  
      
As of December 31, 2016$18,801.9
 $12,881.1
 $31,683.0
 59% 41% 100%
Gross client inflows (1)
1,384.3
 1,554.4
 2,938.7
      
Gross client outflows (1)
(5,223.1) (6,807.8) (12,030.9)      
Market appreciation/(depreciation) & other (2)
2,397.2
 1,557.8
 3,955.0
      
As of September 30, 2017$17,360.3
 $9,185.5
 $26,545.8
 65% 35% 100%
Average AUM for period$18,397.8
 $10,784.9
 $29,182.7
      
           
As of December 31, 2015$20,735.4
 $14,706.8
 $35,442.2
 59% 41% 100%
Gross client inflows (1)
1,295.9
 2,534.1
 3,830.0
      
Gross client outflows (1)
(4,178.4) (5,694.7) (9,873.1)      
Acquired assets1,234.2
 1,660.1
 2,894.3
      
Market appreciation/(depreciation) & other (2)
1,449.9
 1,075.2
 2,525.1
      
As of September 30, 2016$20,537.0
 $14,281.5
 $34,818.5
 59% 41% 100%
Average AUM for period$20,584.2
 $14,724.0
 $35,308.2
      
________________________
(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.
(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
24

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 three months ended March 31, 2021.
(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, 2017March 31, 2022 and 2016:
2021:
 
Blended
Asset
 Equity 
Fixed
Income
 Total 
Blended
Asset
 Equity 
Fixed
Income
 Total
   (in millions)          
As of June 30, 2017$16,613.8
 $9,094.3
 $1,367.4
 $27,075.5
 61% 34% 5% 100%
Gross client inflows (1)
468.0
 278.0
 54.6
 800.6
        
Gross client outflows (1)
(1,193.5) (1,014.5) (103.6) (2,311.6)        
Market appreciation/(depreciation) & other (2)
491.8
 479.6
 9.9
 981.3
        
As of September 30, 2017$16,380.1
 $8,837.4
 $1,328.3
 $26,545.8
 62% 33% 5% 100%
Average AUM for period$16,538.6
 $9,125.2
 $1,337.2
 $27,001.0
        
                
As of June 30, 2016$21,676.8
 $12,608.9
 $1,430.5
 $35,716.2
 61% 35% 4% 100%
Gross client inflows (1)
742.8
 329.1
 54.9
 1,126.8
        
Gross client outflows (1)
(1,628.3) (1,612.5) (148.4) (3,389.2)        
Market appreciation/(depreciation) & other (2)
757.6
 599.3
 7.8
 1,364.7
        
As of September 30, 2016$21,548.9
 $11,924.8
 $1,344.8
 $34,818.5
 62% 34% 4% 100%
Average AUM for period$21,649.0
 $12,412.7
 $1,383.9
 $35,445.6
        
                
 
Blended
Asset
 Equity 
Fixed
Income
 Total 
Blended
Asset
 Equity 
Fixed
Income
 Total
   (in millions)          
As of December 31, 2016$19,909.4
 $10,463.9
 $1,309.7
 $31,683.0
 63% 33% 4% 100%
Gross client inflows (1)
1,733.9
 914.1
 290.7
 2,938.7
        
Gross client outflows (1)
(7,321.1) (4,382.1) (327.7) (12,030.9)        
Market appreciation/(depreciation) & other (2)
2,057.9
 1,841.5
 55.6
 3,955.0
        
As of September 30, 2017$16,380.1
 $8,837.4
 $1,328.3
 $26,545.8
 62% 33% 5% 100%
Average AUM for period$17,917.8
 $9,948.0
 $1,316.9
 $29,182.7
        
                
As of December 31, 2015$22,442.4
 $11,828.4
 $1,171.4
 $35,442.2
 64% 33% 3% 100%
Gross client inflows (1)
2,571.2
 972.1
 286.7
 3,830.0
        
Gross client outflows (1)
(4,982.2) (4,550.1) (340.8) (9,873.1)        
Acquired assets
 2,719.8
 174.5
 2,894.3
        
Market appreciation/(depreciation) & other (2)
1,517.5
 954.6
 53.0
 2,525.1
        
As of September 30, 2016$21,548.9
 $11,924.8
 $1,344.8
 $34,818.5
 62% 34% 4% 100%
Average AUM for period$21,840.7
 $12,167.4
 $1,300.1
 $35,308.2
        

Portfolio
Blended
Asset
EquityFixed
Income
TotalBlended
Asset
EquityFixed
Income
Total
  (in millions)     
As of December 31, 2021$15,074.1 $6,374.4 $1,094.1 $22,542.6 67 %28 %%100 %
Gross client inflows (1)
426.0 176.4 126.0 728.4 
Gross client outflows (1)
(564.4)(680.6)(92.8)(1,337.8)
Market appreciation/(depreciation) & other (2)
(823.4)(418.2)(42.4)(1,284.0)
As of March 31, 2022$14,112.3 $5,452.0 $1,084.9 $20,649.2 69 %26 %%100 %
Average AUM for period$14,457.0 $5,788.2 $1,085.7 $21,330.9 
As of December 31, 2020$13,558.8 $5,545.3 $1,015.3 $20,119.4 67 %28 %%100 %
Gross client inflows (1)
379.8 187.6 59.0 626.4 
Gross client outflows (1)
(501.2)(200.1)(57.5)(758.8)
Market appreciation/(depreciation) & other (2)(3)
701.1 449.8 1.9 1,152.8 
As of March 31, 2021$14,138.5 $5,982.6 $1,018.7 $21,139.8 67 %28 %%100 %
Average AUM for period$13,699.0 $5,719.2 $1,029.1 $20,447.3 
________________________
(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.

(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 $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 three months ended March 31, 2021.

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Table of Contents
The following table summarizes the annualized returns for several of our key investment strategies and the relative performance of the industry benchmark over the periods indicated.benchmarks. Since inception and over long-term periods, we believe these strategies have earned attractive returns on both an absolute and relative basis. These strategies are used across separate account, mutual fund and collective investment trust vehicles, and represent approximately 80% of our AUM as of September 30, 2017.March 31, 2022.
Key StrategiesAUM as of
September 30, 2017 (in millions)
Inception Date Annualized Returns as of September 30, 2017 (3)Key StrategiesAUM as of March 31, 2022
 (in millions)
Inception DateAnnualized Returns as of March 31, 2022 (2)
One Year Three Year Five Year Ten Year Market Cycle (1) InceptionOne YearThree YearFive YearTen YearInception
Long-Term Growth (30%-80% Equity Exposure)

$7,440.5
1/1/1973 8.8% 4.4% 7.2% 4.7% 6.5% 9.6%Long-Term Growth (30%-80% Equity Exposure)$5,711.6 1/1/19732.7%11.1%9.2%7.9%9.5%
Blended Benchmark: 55% S&P 500 Total Return / 45% Bloomberg Barclays Government/Credit Bond  9.9% 7.3% 8.7% 6.4% 5.4% 9.3%
Blended Index (3)Blended Index (3)2.6%9.4%8.3%7.7%8.8%
Core Non-U.S. Equity$4,242.2
10/1/1996 14.4% 3.6% 6.0% 1.6% 5.9% 7.7%Core Non-U.S. Equity$465.8 10/1/1996(4.5)%12.1%9.0%5.9%7.6%
Benchmark: ACWIxUS Index  19.6% 4.7% 7.0% 1.3% 3.8% 5.4%Benchmark: ACWIxUS Index(1.5)%7.5%6.8%5.6%5.3%
Growth with Reduced Volatility (20%-60% Equity Exposure)$3,322.9
1/1/1973 6.5% 3.4% 5.5% 4.2% 5.9% 8.8%Growth with Reduced Volatility (20%-60% Equity Exposure)$2,851.3 1/1/19730.9%8.9%7.4%6.3%8.7%
Blended Benchmark: 40% S&P 500 Total Return / 60% Bloomberg Barclays Government/Credit Bond  7.1% 6.1% 6.9% 5.9% 5.4% 8.8%
Blended Index (4)Blended Index (4)0.8%7.3%6.6%6.2%8.3%
Equity-Oriented (70%-100% Equity Exposure)$1,513.4
1/1/1993 12.8% 5.6% 9.6% 4.9% 6.9% 10.0%Equity-Oriented (70%-100% Equity Exposure)$1,560.6 1/1/19935.6%15.5%13.5%10.9%10.4%
Blended Benchmark: 65% Russell 3000® / 20% ACWIxUS / 15% Bloomberg Barclays U.S. Aggregate Bond  16.0% 8.4% 11.0% 6.0% 5.3% 8.6%
Blended Benchmark: 65% Russell 3000 / 20% ACWIxUS/ 15% Bloomberg U.S. Aggregate BondBlended Benchmark: 65% Russell 3000 / 20% ACWIxUS/ 15% Bloomberg U.S. Aggregate Bond6.8%13.7%11.8%10.8%9.0%
Equity-Focused Blend (50%-90% Equity Exposure)$1,130.9
4/1/2000 10.4% 5.0% 8.2% 4.9% 7.0% 7.0%Equity-Focused Blend (50%-90% Equity Exposure)$1,204.6 4/1/20004.2%13.0%10.7%9.1%7.7%
Blended Benchmark: 53% Russell 3000/ 17% ACWIxUS/ 30% Bloomberg Barclays U.S. Aggregate Bond  13.0% 7.4% 9.4% 5.8% 5.4% 5.4%
Blended Benchmark: 53% Russell 3000 / 17% ACWIxUS/ 30% Bloomberg U.S. Aggregate BondBlended Benchmark: 53% Russell 3000 / 17% ACWIxUS/ 30% Bloomberg U.S. Aggregate Bond4.7%11.6%10.1%9.3%6.2%
Core Equity-Unrestricted (90%-100% Equity Exposure)$951.1
1/1/1995 14.8% 6.1% 11.4% 5.9% 7.7% 11.1%Core Equity-Unrestricted (90%-100% Equity Exposure)$690.0 1/1/19957.0%16.6%14.9%12.5%11.7%
Blended Benchmark: 80% Russell 3000® / 20% ACWIxUS  19.0% 9.6% 12.8% 6.4% 5.1% 9.1%
Blended Benchmark: 80% Russell 3000 / 20% ACWIxUSBlended Benchmark: 80% Russell 3000 / 20% ACWIxUS9.2%16.1%13.7%12.5%9.8%
Core U.S. Equity$703.4
7/1/2000 16.1% 7.7% 12.5% 6.4% 
N/A (2)
 7.5%Core U.S. Equity$304.7 7/1/200010.7%19.2%17.1%14.0%9.4%
Benchmark: Russell 3000® Index  18.7% 10.7% 14.2% 7.6% 
N/A (2)
 5.7%
Benchmark: Russell 3000Benchmark: Russell 300011.9%18.2%15.4%14.3%7.6%
Conservative Growth (5%-35% Equity Exposure)$538.8
4/1/1992 3.6% 2.4% 3.3% 3.8% 5.2% 6.0%Conservative Growth (5%-35% Equity Exposure)$1,191.3 4/1/1992(1.6)%5.1%4.5%3.9%5.8%
Blended Benchmark:15% Russell 3000/ 5% ACWIxUS/ 80% Bloomberg Barclays U.S. Intermediate Aggregate Bond  3.8% 3.7% 3.9% 4.5% 5.0% 6.2%
Blended Benchmark: 15% Russell 3000 / 5% ACWIxUS / 80% Bloomberg U.S. Intermediate Aggregate BondBlended Benchmark: 15% Russell 3000 / 5% ACWIxUS / 80% Bloomberg U.S. Intermediate Aggregate Bond(1.8)%4.2%4.1%4.0%5.9%
Aggregate Fixed Income$495.8
1/1/1984 0.3% 2.3% 1.8% 4.3% 4.9% 7.3%Aggregate Fixed Income$184.4 1/1/1984(3.7)%2.3%2.4%2.3%6.7%
Benchmark: Bloomberg Barclays U.S. Aggregate Bond  0.1% 2.7% 2.1% 4.3% 5.1% 7.2%
Benchmark: Bloomberg U.S. Aggregate BondBenchmark: Bloomberg U.S. Aggregate Bond(4.2)%1.7%2.1%2.2%6.6%
Rainier International Small Cap$629.5
3/28/2012 22.1% 13.2% 15.3% 
N/A (2)
 
N/A (2)
 15.4%Rainier International Small Cap$1,055.1 3/28/2012(3.5)%15.3%12.7%12.3%12.3%
Benchmark: MSCI ACWIxUS Small Cap Index  19.2% 8.1% 9.7% 
N/A (2)
 
N/A (2)
 6%Benchmark: MSCI ACWIxUS Small Cap Index—%10.2%7.9%7.3%7.3%
Disciplined Value$372.4
11/1/2003 15.9% 9% 12.0% 8.2% 
N/A (2)
 10.8%
Disciplined Value USDisciplined Value US$1,326.5 1/1/20138.7%11.6%11.5%
N/A (1)
13.6%
Benchmark: Russell 1000 Value  15.1% 8.5% 13.2% 5.9% 
N/A (2)
 8.4%Benchmark: Russell 1000 Value11.7%13.0%10.3%
N/A (1)
13.6%
__________________________
(1)
The market cycle performance numbers are calculated from April 1, 2000 to September 30, 2017. We believe that a full market cycle time period should contain a wide range of market conditions and usually consists of a bear market, recovery and bull market stage. Our definition of the current market cycle includes the bear market that began with an abrupt decline in the technology sector (4/1/2000 - 9/30/2002), the subsequent failed recovery (10/1/2002 - 10/31/2007), the financial crisis bear market (11/1/2007 - 2/28/2009), and the current bull market (3/1/2009 - current). The period utilized in our current market cycle may differ from periods used by other investment managers.
(2)Performance not available given the product's inception date.
(3)Key investment strategy returns are presented net of fees. Benchmark returns do not reflect any fees or expenses.

(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- 3/31/2022. The 55/45 Blended Index is represented by 55% S&P 500 Total Return Index ("S&P 500") and 45% Bloomberg 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 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 3/31/2022. 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% Intermediate Aggregate Bond Index.

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.
The Company serves
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Table of Contents
We serve as the investment adviser for Manning & Napier Fund, Inc., Rainier Investment Management Mutual Funds, 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 $9.2$5.7 billion,, or 35%28%, of our AUM as of September 30, 2017.March 31, 2022. MNA and Rainier also serve as the investment advisor to all of our separately managed accounts, managing $17.4$14.9 billion,, or 65%72%, of our AUM as of September 30, 2017,March 31, 2022, including assets managed as a sub-advisor to pooled investment vehicles. For the period ended September 30, 2017March 31, 2022 approximately 97%98% of our revenue was earned from clients located in the United States.
In response to industry trends and increasing fee pressure from passive strategies offered by our competitors as well as the anticipated impact of regulatory changes, management is in the midst of an effort to restructure fees across our fund product set. We anticipate that the majority of the financial impacts, including reduced management fees andearn distribution and servicing charges, will occur in the first halffees for providing services to our affiliated mutual funds. Revenue is computed and earned daily based on a percentage of 2018AUM.
We earn custodial service fees for administrative and the impact on our overall revenue margins will vary depending on the business mix at the timesafeguarding services performed by Exeter Trust Company. Fees are calculated as a percentage of the fee change. Given the overall pressure onclient's market value with additional 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 assets in the future.for certain transactions.
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 willingthe strength of our balance sheet has historically provided us the flexibility to make the 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, and equity-based compensation issued under our equity compensationlong-term incentive plan. 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, changes in our stock price reflected in our share-based compensation and/or the number of awards issued.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 the trailing one-, two- and three-yearhistorical 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 expenseexpenses represent amounts paid to various platforms that distribute our mutual fundsintermediaries for distribution, shareholder servicing, administrative servicing and collective trust funds, as well as costs for custodial services, shareholder services, and 12b-1 distribution.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.
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 andas well as changes in values of those investment securities designated as trading and equity method investments.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.
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 LLC'sLLCs 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.
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Table of Contents
Noncontrolling Interests
Manning & Napier, Inc. holds an economic interest of approximately 17.8%97.8% in Manning & Napier Group as of September 30, 2017 but,March 31, 2022 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
There have been no significant changes in ourOur critical accounting policies and estimates from those that wereare disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.2021.
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, 20162021 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.
Three Months Ended September 30, 2017March 31, 2022 Compared to Three Months Ended September 30, 2016March 31, 2021
Assets Under Management
The following table reflects changes in our AUM for the three months ended September 30, 2017March 31, 2022 and 2016:2021:
Three months ended March 31,Period-to-Period
 Three months ended September 30, Period-to-Period 20222021$%
 2017 2016 $ % (in millions)
 (in millions)  
Separately managed accounts        
Wealth Management (4)
Wealth Management (4)
Beginning assets under management $17,714.9
 $20,585.0
 $(2,870.1) (14)%Beginning assets under management$9,776.9 $8,906.4 $870.5 10 %
Gross client inflows (1)
 407.2
 374.6
 32.6
 9 %
Gross client inflows (1)
242.0 224.8 17.2 %
Gross client outflows (1)
 (1,383.4) (1,226.0) (157.4) 13 %
Gross client outflows (1)
(330.0)(305.3)(24.7)%
Market appreciation (depreciation) & other (2)
 621.6
 803.4
 (181.8) (23)%
Market appreciation (depreciation) & other (2) (3)
Market appreciation (depreciation) & other (2) (3)
(514.1)391.6 (905.7)(231)%
Ending assets under management $17,360.3
 $20,537.0
 $(3,176.7) (15)%Ending assets under management$9,174.8 $9,217.5 $(42.7)— %
Mutual funds and collective investment trusts        
Average AUM for periodAverage AUM for period$9,381.6 $8,993.0 $388.6 %
Institutional and Intermediary (4)
Institutional and Intermediary (4)
Beginning assets under management $9,360.6
 $15,131.2
 $(5,770.6) (38)%Beginning assets under management$12,765.7 $11,213.0 $1,552.7 14 %
Gross client inflows (1)
 393.4
 752.2
 (358.8) (48)%
Gross client inflows (1)
486.4 401.6 84.8 21 %
Gross client outflows (1)
 (928.2) (2,163.2) 1,235.0
 (57)%
Gross client outflows (1)
(1,007.8)(453.5)(554.3)122 %
Market appreciation (depreciation) & other (2)
 359.7
 561.3
 (201.6) (36)%
Market appreciation (depreciation) & other (2) (3)
Market appreciation (depreciation) & other (2) (3)
(769.9)761.2 (1,531.1)(201)%
Ending assets under management $9,185.5
 $14,281.5
 $(5,096.0) (36)%Ending assets under management$11,474.4 $11,922.3 $(447.9)(4)%
Average AUM for periodAverage AUM for period$11,949.3 $11,454.3 $495.0 %
Total assets under management        Total assets under management
Beginning assets under management $27,075.5
 $35,716.2
 $(8,640.7) (24)%Beginning assets under management$22,542.6 $20,119.4 $2,423.2 12 %
Gross client inflows (1)
 800.6
 1,126.8
 (326.2) (29)%
Gross client inflows (1)
728.4 626.4 102.0 16 %
Gross client outflows (1)
 (2,311.6) (3,389.2) 1,077.6
 (32)%
Gross client outflows (1)
(1,337.8)(758.8)(579.0)76 %
Market appreciation (depreciation) & other (2)
 981.3
 1,364.7
 (383.4) (28)%
Market appreciation (depreciation) & other (2) (3)
Market appreciation (depreciation) & other (2) (3)
(1,284.0)1,152.8 (2,436.8)(211)%
Ending assets under management $26,545.8
 $34,818.5
 $(8,272.7) (24)%Ending assets under management$20,649.2 $21,139.8 $(490.6)(2)%
Average AUM for periodAverage AUM for period$21,330.9 $20,447.3 $883.6 %
________________________
(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.
(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
28

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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 three months ended March 31, 2021.
(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 by $8.3$0.5 billion from $34.8$21.1 billion at September 30, 2016March 31, 2021 to $26.5$20.6 billion at September 30, 2017.March 31, 2022. The decrease was attributable to market appreciation of $0.6 billion, offset by net client outflows of $11.1 billion, partially offset by market appreciation of $2.8$1.1 billion. Net client outflows consisted of approximately $4.9$0.3 billion of net outflows for separate accountswealth management and $6.2$0.8 billion for mutual fundsinstitutional and collective investment trusts.intermediary. By portfolio, the rates of change in AUM from September 30, 2016March 31, 2021 to September 30, 2017March 31, 2022 consisted of a $3.1$0.5 billion, or 26%9% decrease in our equity portfolio, a $5.2 billion,$26.2 million, or 24%less than 1% decrease in our blended asset portfolio, and a decreasean increase of $16.5$66.2 million, or 1%6% in our fixed income portfolio.portfolio.
We attribute our net cashhave experienced an increase in the overall rate of outflows with gross outflows of approximately $1.3 billion during the three months ended March 31, 2022, compared to our challenging investment returns, whereby our one,$0.8 billion from the same period through March 31, 2021. This increase is mainly driven by a large termination as well as a few larger withdrawals from institutional relationships. Gross client inflows were approximately $0.7 billion during the three and five year annualized returns for many of our key investment strategies have trailed their related benchmarksmonths ended March 31, 2022, a 16% increase compared to the same period in recent years and increased competition from lower fee passive investment products. Our ability to improve cash flows going forward will depend on our ability to sustain improved investment performance and execute on our strategic initiatives focused on gathering and retaining client assets.2021.
The total AUM decrease of $0.5$1.9 billion, or 8%, to $26.5$20.6 billion at September 30, 2017March 31, 2022 from $27.1$22.5 billion at June 30, 2017December 31, 2021 was attributable to market depreciation of $1.3 billion, as well as net client cash outflows of $1.5 billion, partially offset by market appreciation of $1.0$0.6 billion. Our separate accounts and mutual fund and collective investment trust vehicles hadIncluded in net client flows during the three months ended March 31, 2022 were net client outflows in wealth management of approximately $1.0 billion and $0.5 billion, respectively.$0.1 billion. The blended investment gaindepreciation was 4%5.3% in separately managed accountswealth management and 4%approximately 6.0% in mutual fundsinstitutional and collective investment trusts.intermediary. By portfolio, our $1.9 billion AUM decreased by $0.2decrease was derived from decreases of $0.9 billion, or 14%, in our equity portfolio, $1.0 billion, or 6%, in our blended asset portfolio and $0.3 billion in our equity portfolio, and increased by $39.1$9.2 million, or 1%, in our fixed income portfolio.
As of September 30, 2017,March 31, 2022, the composition of our AUM was 65%44% in separate accountswealth management and 35%56% in mutual fundsinstitutional and collective investment trusts, compared to 59% in separate accounts and 41% in mutual funds and collective investment trusts at September 30, 2016.intermediary, consistent with March 31, 2021. The composition of our AUM across portfolios at September 30, 2017March 31, 2022 was 62%69% in blended assets, 33%26% in equity, and 5% in fixed income, compared to 62%we have seen a slight increase in blended assets, 34%and corresponding decrease in our equity portfolios as our asset mix was 67% blended, 28% equity, and 4% in5% fixed income at September 30, 2016.assets as of March 31, 2021.
With regard to our separate accounts,wealth management channel, gross client inflows of $0.4$0.2 billion were offset by approximately $1.4$0.3 billion of gross client outflows during the three months ended September 30, 2017. The $0.4 billion grossMarch 31, 2022. Gross client inflows include approximatelyincluded $0.2 billion into our blended asset portfolioportfolios, and $0.2less than $0.1 billion into both our equity portfolio. Duringportfolios and fixed income portfolios. Outflows during the three months ended September 30, 2017, 75% of our separate account gross client inflowsMarch 31, 2022 were derived$0.3 billion, with 82% from our Direct Channel. With regard to gross client outflows, cancellations were approximately $0.5 billion and withdrawalsblended portfolios, 12% from existing accounts were approximately $0.9 billion. Outflows during the second quarter were 46%, 48%equity, and 6% from blended, equity and fixed income portfolios, respectively. Our separate account clients redeemed assets at a rate of 31% during the quarter, compared to a 33% redemption rate over the trailing twelve months ended September 30, 2017. The annualized separate account retention rate was 89%91% for the three months ended September 30, 2017 compared to 82%March 31, 2022, a decrease from the 96% for the rolling twelve months ended September 30, 2017.March 31, 2022.
Net client outflows of $0.5 billionflows from our mutual fundinstitutional and collective investment trusts includedintermediary channel consisted of gross client inflows of $0.4$0.5 billion, offset by gross client outflows of $0.9$1.0 billion during the three months ended September 30, 2017.March 31, 2022. Gross client inflows included $0.2 billion, or 48% into our blended asset life cycle vehicles, including both risk based and target date strategies, represented $0.3portfolios, $0.1 billion or 73%, of mutual fund27% into our equity portfolios and collective trust fund gross client inflows$0.1 billion or 25% into our fixed income portfolios during the three months ended September 30, 2017.March 31, 2022. With regard to grossinstitutional and intermediary client outflows, $0.6$0.3 billion, or 61%29%, of mutual fund and collective investment trust gross client outflows were from blended asset mutual fundportfolios, $0.6 billion or 64% were from our equity portfolios and collective trust products.$0.1 billion, or 7%, was from our fixed income portfolios during the three months ended March 31, 2022.

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The following table sets forth our results of operations and relatedother data for the three months ended September 30, 2017March 31, 2022 and 2016:2021:
 Three months ended March 31,Period-to-Period
20222021$%
 (in thousands, except share data) 
Revenues
Investment management fees$30,827 $29,676 $1,151 %
Distribution and shareholder servicing2,082 2,153 (71)(3)%
Custodial services1,677 1,645 32 %
Other revenue963 677 286 42 %
Total revenue35,549 34,151 1,398 %
Expenses
Compensation and related costs20,707 18,874 1,833 10 %
Distribution, servicing and custody expenses2,280 2,358 (78)(3)%
Other operating costs11,477 6,710 4,767 71 %
Total operating expenses34,464 27,942 6,522 23 %
Operating income1,085 6,209 (5,124)(83)%
Non-operating income (loss)
Non-operating income (loss), net(607)458 (1,065)(233)%
Income before provision for income taxes478 6,667 (6,189)(93)%
Provision for (benefit from) income taxes(746)703 (1,449)(206)%
Net income attributable to controlling and noncontrolling interests1,224 5,964 (4,740)(79)%
Less: net income attributable to noncontrolling interests38 724 (686)(95)%
Net income attributable to Manning & Napier, Inc.$1,186 $5,240 $(4,054)(77)%
Per Share Data
Net income per share available to Class A common stock
Basic$0.06 $0.31 
Diluted$0.06 $0.26 
Weighted average shares of Class A common stock outstanding
Basic18,988,573 17,026,500 
Diluted21,551,937 20,273,343 
Other financial and operating data
Adjusted EBITDA (1)
$3,080 $6,933 
  Three months ended September 30, Period-to-Period
  2017 2016 $ %
  (in thousands, except share data)  
Revenues        
Investment management services revenue $48,838
 $63,305
 $(14,467) (23)%
Expenses        
Compensation and related costs 22,287
 24,627
 (2,340) (10)%
Distribution, servicing and custody expenses 6,920
 8,798
 (1,878) (21)%
Other operating costs 7,887
 8,188
 (301) (4)%
Total operating expenses 37,094
 41,613
 (4,519) (11)%
Operating income 11,744
 21,692
 (9,948) (46)%
Non-operating income (loss)        
Non-operating income (loss), net 847
 (142) 989
 *
Income before provision for income taxes 12,591
 21,550
 (8,959) (42)%
Provision for income taxes 739
 1,565
 (826) (53)%
Net income attributable to controlling and noncontrolling interests 11,852
 19,985
 (8,133) (41)%
Less: net income attributable to noncontrolling interests 10,331
 17,727
 (7,396) (42)%
Net income attributable to Manning & Napier, Inc. $1,521
 $2,258
 $(737) (33)%
Per Share Data        
Net income per share available to Class A common stock        
Basic $0.10
 $0.15
    
Diluted $0.10
 $0.15
    
Weighted average shares of Class A common stock outstanding        
Basic 14,249,347
 14,042,880
    
Diluted 78,210,019
 14,175,321
    
Cash dividends declared per share of Class A common stock $0.08
 $0.16
    
         
Other financial and operating data        
Economic net income (1)
 $7,681
 $13,361
 $(5,680) (43)%
Economic net income per adjusted share (1)
 $0.10
 $0.16
 
 

Weighted average adjusted Class A common stock outstanding (1)
 79,060,711
 81,171,115
    
________________________
_______________________    
(*)Percentage change not meaningful
(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.

(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 this non-GAAP measure in this report in addition to a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated.
Revenues
Our total investment management servicesfee revenue decreasedincreased by $14.5$1.2 million, or 23%4%, to $48.8$30.8 million for the three months ended September 30, 2017March 31, 2022 from $63.3$29.7 million for the three months ended September 30, 2016.March 31, 2021. This decrease isincrease was driven primarily by an $8.4 billion, or 24%, decreasea 4% increase in our average AUM to $27.0$21.3 billion for the three months ended September 30, 2017March 31, 2022 from $35.4$20.4 billion for the three months ended September 30, 2016. AverageMarch 31, 2021. Investment management fee revenue and average AUM decreasedincreased year over year within each of our sales channels as a result of net client outflows of $11.1 billion, partially offsetdiscussed below.
For our wealth management sales channel, investment management fee revenue increased by market appreciation of $2.8 billion during the rolling twelve months ended September 30, 2017. By portfolio, our AUM decreases were concentrated in our equity and blended asset portfolios, which decreased by 26% and 24%$0.8 million, or 5%, respectively, compared to September 30, 2016. The outflows were largely attributable to challenging portfolio performance relative to benchmarks and increased competition as a result of an industry shift to lower fee passive investment products.

Our average separately managed account fee$16.1 million for the three months ended September 30, 2017 remained consistent at 0.62% whenMarch 31, 2022 from $15.3 million for the three months ended March 31, 2021. This increase is driven primarily by an 4% increase in our average wealth management AUM for the three months ended March 31, 2022 compared to the three months ended September March 31, 2021. As of March 31, 2022, the concentration of assets in our wealth
30 2016.

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management channel was 87% blended assets, 11% equity and 2% fixed income, compared to 87% blended assets, 10% equity and 3% fixed income at March 31, 2021.
For our institutional and intermediary sales channel, investment management fee revenue increased by $0.4 million, or 3%, to $14.7 million for the three months ended September 30, 2017March 31, 2022 from $14.3 million for the three months ended March 31, 2021. This increase is driven primarily by a 4%, or $0.5 billion, increase in average institutional and 2016, separately managed account standard fees ranged from 0.15%intermediary AUM for the three months ended March 31, 2022 compared to 1.25% depending on investment objective and account size.the three months ended March 31, 2021. As of September 30, 2017,March 31, 2022 the concentration of investmentsassets in our separately managed account assetsinstitutional and intermediary channel was 62%53% blended assets, 31%39% equity and 7%8% fixed income, compared to 58%52% blended assets, 36%42% equity and 6% fixed income as of September 30, 2016.March 31, 2021.
Our average fee on mutual fundDistribution and collective investment trust products increasedshareholder servicing revenue decreased by $0.1 million, or 3%, to 0.85%$2.1 million for the three months ended September 30, 2017March 31, 2022 from 0.77%$2.2 million for the three months ended September 30, 2016.March 31, 2021. This increasedecrease was primarily due todriven by a single retirement plan relationship which redeemed approximately $2.5 billion during the second quarter of 2017 where the fees were lower than those associated with the remaining population of mutual fund and collective AUM. The management fees earned onchange in business mix within our mutual fund and collective investment trust management fees ranged from 0.14%funds.
Custodial services revenue increased by less than $0.1 million, or 2%, to 1.00%, depending on investment strategy,$1.7 million for the three months ended September 30, 2017 and 2016. As of September 30, 2017,March 31, 2022 from $1.6 million for the concentration of assetsthree months ended March 31, 2021. The increase primarily relates to a corresponding increase in our mutual fund and collective investment trusts was 62% blended assets, 37% equity and 1% fixed income, compared to 68% blended assets, 31% equity and 1% fixed income as of September 30, 2016.trust AUM for each period.
Operating Expenses
Our operating expenses decreasedincreased by $4.5$6.5 million or 11%, to $37.1$34.5 million for the three months ended September 30, 2017March 31, 2022 from $41.6$27.9 million for the three months ended September 30, 2016.March 31, 2021.
Compensation and related costs decreasedincreased by $2.3$1.8 million, or 10%, to $22.3$20.7 million for the three months ended September 30, 2017March 31, 2022 from $24.6$18.9 million for the three months ended September 30, 2016. This decreaseMarch 31, 2021. The increase was driven by lower variable incentive costs as a resultthe impacts of the reduction in AUM, coupled withimplementation of a reduction in our average overall workforcedeferred compensation plan during the first quarter of 7% compared to2021 and the three months ended September 30, 2016.corresponding one-time savings during the initial year of implementation. When considered as a percentage of revenue, compensation and related costs was 58% for the three months ended September 30, 2017 was 46% compared to 39%March 31, 2022 and 55% for the three months ended September 30, 2016. We anticipate that our compensation ratio as a percentage of revenue will remain elevated in the near term compared to prior periods.March 31, 2021.
Distribution, servicing and custody expenses decreased by $1.9$0.1 million, or 21%3%, to $6.9$2.3 million for the three months ended September 30, 2017March 31, 2022 from $8.8$2.4 million for the three months ended September 30, 2016.March 31, 2021. The decrease was generally driven byexpense decreased despite a 37% decrease1% increase in mutual fund and collective investment trust average AUM for the three months ended September 30, 2017March 31, 2022 compared to the three months ended September 30, 2016. The percentage decrease inMarch 31, 2021. AUM exceeds the percentage decrease in expense since 2017 redemptions have beenincreases were concentrated in those relationshipsfund share classes where we dothe company does not haveincur distribution and servicing obligations. Specifically, we had a single retirement plan relationship which redeemed approximately $2.5 billion during the second quarter of 2017 where there was no associated distribution obligation.fees. As a percentage of mutual fund and collective investment trust average AUM, distribution, servicing and custody expense was 0.30%0.15% for the three months ended September 30, 2017,March 31, 2022, compared to 0.24%0.17% for the three months ended September 30, 2016.March 31, 2021.
Other operating costs for the three months ended September 30, 2017 was $7.9increased by $4.8 million compared to $8.2$11.5 million for the three months ended September 30, 2016. Included in other operating costs for the three months ended September 30, 2017 were certain one-time costs, including those associated with the adoption of the Rainier International Discovery Fund onto the Manning & Napier fund platform and the mutual fund fee restructure. As a percentage of revenue, other operating costs was 16% for the three months ended September 30, 2017 and 13% for the three months ended September 30, 2016.
Non-Operating Income (Loss)
Non-operating income for the three months ended September 30, 2017 was $0.8 million, compared to net loss of $0.1March 31, 2022 from $6.7 million for the three months ended September 30, 2016. Included within non-operating income (loss) for the three months ended September 30, 2017 and 2016 was $0.7 million of net gains and $0.1 million of net losses, respectively, on investments held by us to provide initial cash seeding for product development purposes. Interest expense for the three months ended September 30, 2017 decreased by approximately $0.1 million compared to the three months ended September 30, 2016, driven by the termination of our credit facility in early 2017 and the unused commitment fee on our credit facility paid in 2016.
Provision for Income Taxes
Our tax provision decreased by $0.8 million to $0.7 million for the three months ended September 30, 2017 from $1.6 million for the three months ended September 30, 2016.March 31, 2021. The change was primarily driven by a decrease in taxable earnings compared to the prior year.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Assets Under Management
The following table reflects changes in our AUM for the nine months ended September 30, 2017 and 2016:
  Nine months ended September 30, Period-to-Period
  2017 2016 $ %
  (in millions)  
Separately managed accounts        
Beginning assets under management $18,801.9
 $20,735.4
 $(1,933.5) (9)%
Gross client inflows (1)
 1,384.3
 1,295.9
 88.4
 7 %
Gross client outflows (1)
 (5,223.1) (4,178.4) (1,044.7) 25 %
Acquired assets 
 1,234.2
 (1,234.2) *
Market appreciation (depreciation) & other (2)
 2,397.2
 1,449.9
 947.3
 65 %
Ending assets under management $17,360.3
 $20,537.0
 $(3,176.7) (15)%
Mutual funds and collective investment trusts        
Beginning assets under management $12,881.1
 $14,706.8
 $(1,825.7) (12)%
Gross client inflows (1)
 1,554.4
 2,534.1
 (979.7) (39)%
Gross client outflows (1)
 (6,807.8) (5,694.7) (1,113.1) 20 %
Acquired assets 
 1,660.1
 (1,660.1) *
Market appreciation (depreciation) & other (2)
 1,557.8
 1,075.2
 482.6
 45 %
Ending assets under management $9,185.5
 $14,281.5
 $(5,096.0) (36)%
Total assets under management        
Beginning assets under management $31,683.0
 $35,442.2
 $(3,759.2) (11)%
Gross client inflows (1)
 2,938.7
 3,830.0
 (891.3) (23)%
Gross client outflows (1)
 (12,030.9) (9,873.1) (2,157.8) 22 %
Acquired assets 
 2,894.3
 (2,894.3) *
Market appreciation (depreciation) & other (2)
 3,955.0
 2,525.1
 1,429.9
 57 %
Ending assets under management $26,545.8
 $34,818.5
 $(8,272.7) (24)%
________________________
(*)Percentage change not meaningful
(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.

Our total AUM decreased by $8.3 billion from $34.8 billion at September 30, 2016 to $26.5 billion at September 30, 2017. The decrease was attributable to net client outflows of $11.1 billion, partially offset by market appreciation of $2.8 billion. Net client outflows consisted of approximately $4.9 billion of net outflows for separate accounts and $6.2 billion for mutual funds and collective investment trusts. We attribute our net cash outflows to our challenging investment returns, whereby our one, three, and five year annualized returns for many of our key investment strategies have trailed their related benchmarks in recent years and increased competition from lower fee passive investment products. Our ability to improve cash flows going forward will depend on our ability to sustain improved investment performance and execute on our strategic initiatives focused on gathering and retaining client assets.
The total AUM decrease of $5.1 billion, or 16%, to $26.5 billion at September 30, 2017 from $31.7 billion at December 31, 2016 was attributable to net client cash outflows of $9.1 billion, partially offset by market appreciation of $4.0 billion. Included in net client flows during the nine months ended September 30, 2017 were net client outflows in separately managed accounts of approximately $3.8 billion and mutual funds and collective investment trusts of approximately $5.3 billion. The blended investment gain was 12.7% in separately managed accounts and 12.1% in mutual funds and collective investment trusts. By portfolio, our net $5.1 billion AUM decrease was derived from a decrease of $3.5 billion, or 18%, in our

blended asset portfolio and $1.6 billion, or 16%, in our equity portfolio, offset by an increase of $18.6 million, or 1%, in our fixed income portfolio.
As of September 30, 2017, the composition of our AUM was 65% in separate accounts and 35% in mutual funds and collective investment trusts, compared to 59% in separate accounts and 41% in mutual funds and collective investment trusts at September 30, 2016. The composition of our AUM across portfolios at September 30, 2017 was 62% in blended assets, 33% in equity, and 5% in fixed income, compared to 62% in blended assets, 34% in equity, and 4% in fixed income at September 30, 2016.
With regard to our separate accounts, gross client inflows of $1.4 billion were offset by approximately $5.2 billion of gross client outflows during the nine months ended September 30, 2017. The $1.4 billion of gross client inflows included $0.6 billion into our blended asset portfolios, $0.5 billion into our equity portfolios and $0.2 billion into fixed income portfolios. During the nine months ended September 30, 2017, 66% of our separate account gross client inflows were derived from our Direct Channel. Gross client inflows were split with 65% contributions from existing accounts and 35% from new relationships. Gross client outflows were split with 45% withdrawals from existing accounts and 55% representing client cancellations. Our blended asset and equity portfolios experienced net client outflows of approximately $1.4 billion and $2.4 billion, respectively. In light of challenging relative returns, our separate account clients redeemed assets at a rate of 37% during the nine months ended September 30, 2017, compared to a 33% redemption rate over the trailing twelve months ended September 30, 2017. The annualized separate account retention rate was 80% for the nine months ended September 30, 2017, down from 82% for the rolling twelve months ended September 30, 2017.
Net client outflows of $5.3 billion from our mutual fund and collective investment trusts included gross client inflows of $1.6 billion offset by gross client outflows of $6.8 billion during the nine months ended September 30, 2017. Gross client inflows into our blended asset life cycle vehicles, including both risk based and target date strategies, represented $1.1 billion, or 71%, of mutual fund and collective trust fund gross client inflows during the nine months ended September 30, 2017. With regard to gross client outflows, $5.3 billion, or 77%, of mutual fund and collective investment trust gross client outflows were from blended asset mutual fund and collective trust products. A single retirement plan relationship redeemed approximately $2.5 billion from our blended asset portfolio during the second quarter of 2017.

The following table sets forth our results of operations and other data for the nine months ended September 30, 2017 and 2016:
  Nine months ended September 30, Period-to-Period
  2017 2016 $ %
  (in thousands, except share data)  
Revenues        
Investment management services revenue $155,859
 $189,852
 $(33,993) (18)%
Expenses        
Compensation and related costs 67,901
 70,973
 (3,072) (4)%
Distribution, servicing and custody expenses 21,415
 26,590
 (5,175) (19)%
Other operating costs 23,099
 24,854
 (1,755) (7)%
Total operating expenses 112,415
 122,417
 (10,002) (8)%
Operating income 43,444
 67,435
 (23,991) (36)%
Non-operating income (loss)        
Non-operating income (loss), net 2,835
 1,216
 1,619
 133 %
Income before provision for income taxes 46,279
 68,651
 (22,372) (33)%
Provision for income taxes 3,324
 4,784
 (1,460) (31)%
Net income attributable to controlling and noncontrolling interests 42,955
 63,867
 (20,912) (33)%
Less: net income attributable to noncontrolling interests 37,852
 56,586
 (18,734) (33)%
Net income attributable to Manning & Napier, Inc. $5,103
 $7,281
 $(2,178) (30)%
Per Share Data        
Net income per share available to Class A common stock        
Basic $0.35
 $0.49
    
Diluted $0.35
 $0.48
    
Weighted average shares of Class A common stock outstanding        
Basic 14,135,288
 13,916,721
    
Diluted 14,241,642
 14,173,283
    
Cash dividends declared per share of Class A common stock $0.24
 $0.48
    
         
Other financial and operating data        
Economic net income (1)
 $28,230
 $42,570
 $(14,340) (34)%
Economic net income per adjusted share (1)
 $0.35
 $0.52
    
Weighted average adjusted Class A common stock outstanding (1)
 79,747,791
 82,282,598
    
________________________
(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
Our investment management services revenue decreased by $34.0 million, or 18%, to $155.9 million for the nine months ended September 30, 2017 from $189.9 million for the nine months ended September 30, 2016. This decrease was driven primarily by a $6.1 billion, or 17%, decrease$1.9 million non-cash charge recorded in the current period for the impairment of capitalized costs in connection with hosted software arrangements as well as by increased professional fees and other merger related costs. We incurred the impairment charge after determining we would terminate portions of a software license agreement with a third-party service provider. The terminated services relate to the creation of an advisor portal and enhancement of our portfolio accounting and performance reporting functions, but do not represent a change in our average AUMstrategic efforts to $29.2 billion for the nine months ended September 30, 2017 from $35.3 billion for the nine months ended September 30, 2016. Average AUM decreased as a result of net client outflows of $11.1 billion offset by market appreciation and other changes of $2.8 billion for the rolling twelve months ended September 30, 2017. By portfolio,advance our equity and blended asset portfolios decreased by 26% and 24%, respectively, compared to September 30, 2016. The outflows were largely attributable to challenging portfolio performance relative to benchmarks.
Our average separately managed account fee remained consistent at 0.62% for the nine months ended September 30, 2017 compared to 0.62% for the nine months ended September 30, 2016. For both the nine months ended September 30, 2017 and 2016, separately managed account management fees ranged from 0.15% to 1.25%, depending on investment objective and account size. As of September 30, 2017, the concentration of assets in our separately managed accounts was 62% blended

assets, 31% equity and 7% fixed income, compared to 58% blended assets, 36% equity and 6% fixed income as of September 30, 2016.
Our average fee on mutual fund and collective investment trust products was 0.81% for the nine months ended September 30, 2017, an increase from 0.78% for the nine months ended September 30, 2016. This increase was primarily due to a single retirement plan relationship which redeemed approximately $2.5 billion during the second quarter of 2017 where the fees were lower than those associated with the remaining population of mutual fund and collective AUM. For both the nine months ended September 30, 2017 and 2016, mutual fund and collective investment trust management fees ranged from 0.14% to 1.00%, depending on investment strategy. As of September 30, 2017 the concentration of assets in our mutual fund and collective investment trusts was 62% blended assets, 37% equity and 1% fixed income, compared to 68% blended assets, 31% equity and 1% fixed income as of September 30, 2016.
Operating Expenses
Our operating expenses decreased by $10.0 million, or 8%, to $112.4 million for the nine months ended September 30, 2017 from $122.4 million for the nine months ended September 30, 2016.
Compensation and related costs decreased by $3.1 million, or 4%, to $67.9 million for the nine months ended September 30, 2017 from $71.0 million for the nine months ended September 30, 2016. The decrease was primarily driven by lower variable incentive costs as a result of the reduction in AUM, coupled with a reduction in equity based compensation due to the timing and amount of unvested equity awards. When considered as a percentage of revenue, compensation and related costs for the nine months ended September 30, 2017 was 44% compared to 37% in 2016.digital transformation. 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 $5.2 million, or 19%, to $21.4 million for the nine months ended September 30, 2017 from $26.6 million for the nine months ended September 30, 2016. The decrease was generally attributable to a 27% decrease in mutual fund and collective investment trust average AUM for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The percentage decrease in AUM exceeds the percentage decrease in expense since 2017 redemptions have been concentrated in those relationships where we do not have distribution and servicing obligations. Specifically, we had a single retirement plan relationship which redeemed approximately $2.5 billion during the second quarter of 2017 where there was no associated distribution obligation. As a percentage of mutual fund and collective investment trust average AUM, distribution, servicing and custody expense was 0.27% for the nine months ended September 30, 2017, comparedexpect to 0.24% for the nine months ended September 30, 2016.
Other operating costs decreased by $1.8 million, or 7%, to $23.1 million for the nine months ended September 30, 2017 from $24.9 million for the nine months ended September 30, 2016.incur future cash expenditures in connection with terminating these services. As a percentage of revenue, other operating costs for the ninethree months ended September 30, 2017March 31, 2022 was 15%32% compared to 13%20% for 2016.three months ended March 31, 2021.
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Non-Operating Income (Loss)
Non-operating loss for the three months ended March 31, 2022 was $0.6 million, a decrease of $1.1 million, from non-operating income of $0.5 million for the three months ended March 31, 2021. The following table reflects the components of non-operating income (loss) for the three months ended March 31, 2022 and 2021:
 Three months ended March 31,Period-to-Period
20222021$%
 (in thousands) 
Non-operating income (loss)
Interest expense$(1)$(2)$44 %
Interest and dividend income (1)
40 123 (83)(67)%
Net gains (losses) on investments (2)
(646)337 (983)(292)%
Total non-operating income (loss)$(607)$458 $(1,065)(233)%
__________________________
(1)The decrease in interest and dividend income for the ninethree months ended September 30, 2017 was $2.8 million,March 31, 2022 compared to $1.2 million for the nine months ended September 30, 2016. Included2021 is attributable to a decrease in non-operating income (loss) was ainterest rates.
(2)The amount of net gain of $2.3 million(loss) on investments held by us, to provide initial cash seeding for product development purposes forand to hedge economic exposure to market movements on our deferred compensation plan, will vary depending on the nine months ended September 30, 2017, compared to $1.2 million in 2016. Interest expense for the nine months ended September 30, 2017 decreased by $0.3 million compared to the nine months ended September 30, 2016, driven by the terminationperformance and overall amount of our credit facility in early 2017 and the unused commitment fee on our credit facility paid in 2016.investments.

Provision for Income Taxes
Our tax provision decreased by $1.5 million, or 31%, to $3.3We recognized a benefit from income taxes of $0.7 million for the ninethree months ended September 30, 2017 from $4.8March 31, 2022, compared to a provision of $0.7 million for the ninethree months ended September 30, 2016. TheMarch 31, 2021. In each period, we recognized a benefit for incremental tax benefits realized from the vesting of restricted stock units and the exercise of stock options in the first quarter of 2021. This change in income taxes is attributed primarily to a reduction in earnings before income taxes during the three months ended March 31, 2022 compared to 2021. This decrease in income taxes for the three months ended March 31, 2022, compared to 2021 was primarily drivenpartially offset by a decrease in taxablehigher portion of Manning & Napier Group's earnings assubject to taxation at the C-Corporation level compared to the prior year.same period in 2021. Manning & Napier Inc.'s weighted ownership of Manning & Napier Group was 97.8% for the three months ended March 31, 2022, compared to 88.9% during the same period in 2021. This ownership increase is primarily the result of the annual exchange process between the Company and the holders of its noncontrolling interests.

Supplemental Non-GAAP Financial Information
To provide investors with greater insight into operating results, promote transparency, facilitate comparison of period-to-period results, and to allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement ourthe Company supplements its consolidated statements of operations presented on a GAAP basisin accordance with accounting principles generally accepted in the United States of America ("GAAP") with non-GAAP financial measures of earnings. Please refer to the schedule in this release for a reconciliation of non-GAAP financial measures to GAAP measures.
Management usesBeginning with the release of our operating results for this quarter, we have moved away from economic income, economic net income and economic net income per adjusted share as supplemental non-GAAP measures. Given our current organizational structure and that the strategic restructuring efforts initiated in 2019 are substantially complete, we believe that the non-GAAP measure of Adjusted EBITDA is a more representative supplemental measure of our results. Management uses Adjusted EBITDA as a financial measuresmeasure to evaluate the profitability and efficiency of the Company's business in the ordinary, ongoing and customary course of its business. Economic net income and economic net income per adjusted share areoperations. Adjusted EBITDA is not presented in accordance with GAAP.

EconomicGAAP, and removes the impact of interest, taxes, depreciation, amortization, and net gain (loss) on the tax receivable agreement (if any). Adjusted EBITDA also adds back net income is a non-GAAP measure of after-tax operating performance(loss) attributable to the noncontrolling interests and equals our 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,assumes all income of Manning & Napier Group, LLC is allocated to the units of Manning & Napier Group is treated as if it were allocatedCompany. Non-GAAP measures for prior periods have been revised to us and represents an estimate of income tax expense at an effective rate of 39.0% and 38.0% for the three months ended September 30, 2017 and 2016, respectively, and 39.0% and 38.0% for the nine months ended September 30, 2017 and 2016, respectively, reflecting assumed federal, state and local income taxes. Economic net income per adjusted share 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 and unvested equity awards 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 andconform to the holders of the units of Manning & Napier Group.current period presentation.
Non-GAAP measures areInvestors should consider this non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Additionally, ourthe Company’s non-GAAP financial 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 our other financial and operating data for the nine months endedSeptember 30, 2017 and 2016:
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  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
  (in thousands, except share data)
Income before provision for income taxes $12,591
 $21,550
 $46,279
 $68,651
Economic net income (Non-GAAP) $7,681
 $13,361
 $28,230
 $42,570
Economic net income per adjusted share (Non-GAAP) $0.10
 $0.16
 $0.35
 $0.52
Weighted average adjusted Class A common stock outstanding (Non-GAAP) 79,060,711
 81,171,115
 79,747,791
 82,282,598
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The following table sets forth, for the periods indicated, a reconciliation of non-GAAP financial measures to GAAP measures:
 Three months ended March 31,
20222021
 (in thousands, except share data)
Net income attributable to Manning & Napier, Inc.$1,186 $5,240 
Add back: Net income attributable to noncontrolling interests38 724 
Add back: Provision for (benefit from) income taxes(746)703 
Income before provision for income taxes$478 $6,667 
Add back: Interest income and expense, net(19)(108)
Add back: Depreciation247 270 
Add back: Amortization (1)
2,374 105 
EBITDA3,080 6,934 
Add back: Change in liability under tax receivable agreement— — 
Adjusted EBITDA$3,080 $6,934 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
  (in thousands, except share data)
Net income attributable to Manning & Napier, Inc. $1,521
 $2,258
 $5,103
 $7,281
Add back: Net income attributable to noncontrolling interests 10,331
 17,727
 37,852
 56,586
Add back: Provision for income taxes 739
 1,565
 3,324
 4,784
Income before provision for income taxes 12,591
 21,550
 46,279
 68,651
Adjusted income taxes (Non-GAAP) 4,910
 8,189
 18,049
 26,081
Economic net income (Non-GAAP) $7,681
 $13,361
 $28,230
 $42,570
         
Weighted average shares of Class A common stock outstanding - Basic 14,249,347
 14,042,880
 14,135,288
 13,916,721
Assumed vesting, conversion or exchange of:        
Weighted average Manning & Napier Group, LLC units outstanding (noncontrolling interest) 63,937,284
 65,784,571
 64,541,055
 66,686,373
Weighted average unvested restricted share-based awards 874,080
 1,343,664
 1,071,448
 1,679,504
Weighted average adjusted shares (Non-GAAP) 79,060,711
 81,171,115
 79,747,791
 82,282,598
         
Economic net income per adjusted share (Non-GAAP) $0.10
 $0.16
 $0.35
 $0.52
________________________

(1)Amortization for the three months ended March 31, 2022 includes a $1.9 million non-cash charge recorded for the impairment of existing internal-use software.

Liquidity and Capital Resources
Historically, our cash and liquidity needs have been met primarily through cash generated by our operations.operations and cash and cash equivalents on hand. Our current financial condition isat March 31, 2022 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, 2017March 31, 2022 and December 31, 20162021
 September 30, 2017 December 31, 2016March 31, 2022December 31, 2021
 (in thousands) (in thousands)
Cash and cash equivalents $103,322
 $100,819
Cash and cash equivalents$51,738 $73,489 
Accounts receivable $17,254
 $22,195
Accounts receivable11,140 13,851 
Investment securities $38,322
 $36,475
Investment securities37,020 24,608 
Investment securities - consolidated funds $
 $995
Amounts payable under tax receivable agreement (1)
 $34,719
 $37,073
Amounts payable under tax receivable agreement (1)
$17,772 $17,772 
Contingent consideration liability (2)
 $
 $
________________________
(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, 2017 and December 31, 2016, 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, 2022 and December 31, 2021, 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") and any other holders of units of Manning & Napier Group will be entitled to receive equivalent distributions on a pari-passu basis.
(2)Represents the fair value of additional cash payments related to our acquisition of Rainier of up to $32.5 million over the period ending December 31, 2019, contingent upon Rainier's achievement of certain financial targets.
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 January 12, 2017, we terminated our revolving credit agreement that provided borrowing capacityFebruary 6, 2022, the Board of Directors approved a share repurchase program authorizing the purchase of up to $100.0 million. No amounts had been borrowed$10.0 million of Manning & Napier Inc. Class A common shares. The authority to repurchase shares will be exercised from
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time to time as market conditions warrant, is subject to regulatory considerations and thus none were outstanding. Our decision to terminate the facility waswill expire on December 31, 2022. The timing, amount, and other terms and conditions of any repurchases will be determined by management at its discretion based on an evaluationa variety of factors, including the costmarket price of shares, general market and economic conditions, and legal requirements. It is possible that no shares will be repurchased. The repurchase program may be modified, discontinued or suspended at any time. The Company currently intends to fund the program through cash on hand and future cash flow.
On March 2, 2022, the Company's Board of Directors declared a $0.05 per share dividend to the holders of Class A common stock. The dividend was paid on March 30, 2022 to shareholders of record as of March 16, 2022. On April 20, 2022, the Board of Directors declared a $0.05 per share dividend to the holders of Class A common stock. The dividend is payable on or about May 20, 2022 to shareholders of record as of May 6, 2022. These cash dividends on our Class A common stock were, and any future dividends would be, funded from our portion of distributions made by Manning & Napier Group, from its available cash generated from operations.
As of March 31, 2022, a total of 428,812 units of Manning & Napier Group were held by the noncontrolling interests, including M&N Group Holdings. Pursuant to the terms of the facility, the anticipated need to finance capitalannual exchange process, such units may be tendered for exchange or other projects,redemption.
With approximately $88.8 million in cash and the sufficiency of liquidity and capital resources.
On May 10, 2017, we entered into an agreement to sell certain U.S. equity products to a third party. The selling price will be determined by the assets under managementinvestment securities on the date of closing, which is expected to be in the fourth quarter of 2017. The amount of the assets under management to be soldhand as of September 30, 2017 was approximately $0.4 billion.
March 31, 2022, we expect that we have sufficient liquidity available to meet our needs for the foreseeable future. We believe that cash on hand and cash generated from operations will be sufficient over the next twelve months to meet our working capital requirements. Further, we expect that cash on hand, including short-term investments and cash generated by operations will be sufficient to meet our liquidity needs for the foreseeable future.
Cash Flows
The following table sets forth our cash flows for the ninethree months ended September 30, 2017March 31, 2022 and 2016.2021. Operating activities consist primarily of net income subject to adjustments for changes in operating assets and liabilities, equity-based compensation expense, changes in the liability under the TRA and contingent consideration, deferred income tax expense and depreciation and amortization. Investing activities consist primarily of the purchase and sale of investments for the purpose of providing initial cash seeding for product development and for cash management purposes and purchases of property and equipment. Financing activities consist primarily of distributions to noncontrolling interests, purchases of treasury stock, dividends paid on our Class A common stock, payment of shares withheld to satisfy withholding requirements and purchases of Class A units held by noncontrolling interests of Manning & Napier Group.
 Three months ended March 31,
 20222021
 (in thousands)
Net cash used in operating activities$(5,589)$(5,727)
Net cash used in investing activities(13,465)(64)
Net cash used in financing activities(2,697)(6,649)
Net change in cash and cash equivalents$(21,751)$(12,440)
  Nine months ended September 30,
  2017 2016
  (in thousands)
Net cash provided by operating activities $41,317
 $65,370
Net cash provided by (used in) investing activities 687
 (735)
Net cash used in financing activities (39,501) (58,518)
Net change in cash and cash equivalents $2,503
 $6,117


NineThree Months Ended September 30, 2017 March 31, 2022 Compared to NineThree Months EndedSeptember 30, 2016 March 31, 2021
Operating Activities
Operating activities provided $41.3used $5.6 million and $65.4$5.7 million of net cash for the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, respectively. This overall $24.1$0.1 milliondecrease in net cash provided byused in operating activities for the ninethree months ended September 30, 2017March 31, 2022 compared to 20162021 was dueattributed to a decrease in net income after adjustment for non-cash items of approximately $23.0$2.6 million during the three months ended March 31, 2022 compared to the same period of 2021. The decrease in net income after adjustment for non-cash items of $5.4 million during the three months ended March 31, 2022 compared to $8.0 million during the same period in 2021 was driven by lower revenues resulting primarily from changesa decrease in our average AUM. This decrease was also due to $3.8 million ofin net cash from consolidated funds due to the timing of trading activityused in 2016,operating activities was partially offset by an increase of $2.7 millionchanges in operating assets and liabilities.operating liabilities of approximately $2.8 million, driven by the timing and amount of payments of accrued incentive compensation.
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Investing Activities
Investing activities provided $0.7used $13.5 million and used $0.7$0.1 million of net cash for the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, respectively. This change was primarily driven by changesa decrease in cash from investing activities of $7.4$13.1 million due to our funding of and timing of activity within our investment securities. During the ninethree months ended September 30, 2017,March 31, 2022, we used approximately $7.5$13.2 million, net, forfrom the purchase, sale and maturity of short-term investments for cash management purposes, which was offset by cash provided of approximately $10.4 million net within our investment securities forcompared to using $0.1 million in the purposessame period of new product development due2021, primarily related to the redemptionfunding of certain portfolioslong term incentive awards and deferred compensation granted during the seedingthree months ended March 31, 2022 and invested in selected Manning & Napier mutual funds. We used approximately $0.3 million and less than $0.1 million of a new portfolio. In addition, we utilized $9.3 millioncash for acquisitions during 2016. Ourthe purchases of property and equipment was approximately $1.1 million during the ninethree months ended September 30, 2017 compared to $0.2 million in 2016.March 31, 2022 and 2021, respectively.
Financing Activities
Financing activities used $39.5$2.7 million and $58.5$6.6 million of net cash for the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, respectively. This overall $19.0$4.0 milliondecrease in net cash used in financing activities was is primarily the result of a reduction in distributions to noncontrolling interests of $9.7 million and dividends paid on Class A common stock of $2.3 million driven by lower income after adjustment for non-cash items in 2017 compared to 2016. The decrease in cash used in financing activities was also driven by a decrease of $6.3 million of cash used for the purchase of Class A unitstreasury shares under the share repurchase program. We used cash of Manning & Napier Group pursuant to the exchange agreement entered into at the time of our IPO of $9.8$3.0 million during the ninethree months ended September 30, 2017, comparedMarch 31, 2021 to $16.1 million in 2016. This decrease was due to a lower exchange price and a lower number of units exchanged in 2017 compared to 2016.repurchase shares whereas we did not purchase any shares during the three months ended March 31, 2022. In addition, we used cash of $1.7 million and $3.3 million during the ninethree months ended September 30, 2017March 31, 2022 and 2016 we utilized cash of approximately $0.3 million and $1.0 million,2021, respectively, for the payment of shares withheld to satisfy tax withholdings due towithholding requirements in connection with the vesting of equity awardsrestricted stock units and exercise of stock options. This decrease in cash used is attributed to the timing and amount of restricted stock units vesting and stock options exercised during the respective periods. This decrease in cash used was partially offset by an increase in cash used of approximately $1.0 million for dividends paid on Class A common stock as we did not pay cash dividends during the three months ended March 31, 2021.
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. Due to the market volatility and corresponding earnings volatility that could occur stemming from the COVID-19 pandemic, the Board of Directors did not approve any cash dividends on our Class A common stock after the dividend paid on May 1, 2020 until July 2021. Given the continued strength of our balance sheet, along with the renewed stability of our earnings, our Board of Directors reinstated the cash dividends on our Class A common stock while continuing our share repurchase program.
On October 25, 2016,March 2, 2022, the Company's Board of Directors declared a $0.16$0.05 per share dividend to the holders of Class A common stock. The dividend was paid on February 1, 2017March 30, 2022 to shareholders of record as of January 13, 2017.March 16, 2022.
On March 7, 2017,April 20, 2022, the Board of Directors declared an $0.08 per share dividend to the holders of Class A common stock. The dividend was paid on May 1, 2017 to shareholders of record as of April 14, 2017.
On April 25, 2017, the Board of Directors declared an $0.08 per share dividend to the holders of Class A common stock. The dividend was paid on August 1, 2017 to shareholders of record as of July 14, 2017.
On July 25, 2017, the Board of Directors declared an $0.08 per share dividend to the holders of Class A common stock. The dividend was paid on November 1, 2017 to shareholders of record as of October 13, 2017.
On October 24, 2017, the Board of Directors declared an $0.08a $0.05 per share dividend to the holders of Class A common stock. The dividend is payable on or about February 1, 2018May 20, 2022 to shareholders of record as of January 15, 2018.
We currently intend to pay quarterly cash dividends on our Class A common stock. We intend to fund such dividends from our portion of distributions made by Manning & Napier Group, from its available cash generated from operations. William Manning, as the holder of our Class B common stock, will not be entitled to any cash dividends in his capacity as a Class B stockholder, but will, in his capacity as an indirect holder of Class A units of Manning & Napier Group, generally participate on a pro rata basis in distributions by Manning & Napier Group.May 6, 2022.
The declaration and payment of all future dividends, if any, will be at the sole discretion of our boardBoard of directors.Directors. In determining the amount of any future dividends, our boardBoard of directorsDirectors 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 TRA;TRA 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 stockholdersshareholders 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;conditions, including the impact of the COVID-19 pandemic; and
any other factors that our boardBoard of directorsDirectors 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.
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Contractual ObligationsOn March 2, 2022, the Company's Board of Directors approved a $2.0 million distribution from Manning & Napier Group to Manning & Napier and the noncontrolling interests of Manning & Napier Group, of which less than $0.1 million was paid to the noncontrolling members of Manning & Napier Group.
There have been no material changes in our contractual obligations as set forth in our Annual Report on Form 10-K forOn April 20, 2022, the year ended December 31, 2016.Company's Board of Directors approved a $2.0 million distribution from Manning & Napier Group to Manning & Napier and the noncontrolling interests of Manning & Napier Group, of which less than $0.1 million will be paid to the noncontrolling members of Manning & Napier Group.
Off Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2017.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market RiskAs a "smaller reporting company," we are not required to provide this information.
Our exposure to market risk is directly related to the role of our operating company as an investment advisor for the mutual funds and separate accounts it manages. Substantially all of our revenues are derived from investment management agreements with these funds and accounts. Under these agreements, the investment management fees we receive are based on the value of our AUM and our fee rates. Accordingly, our revenues and net income may decline as a result of our AUM decreasing due to depreciation of our investment portfolios. In addition, such a decline could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenues to decline further.
The value of our AUM was $26.5 billion as of September 30, 2017. Assuming a 10% increase or decrease in the value of our AUM and the change being proportionally distributed over all our products, the value would increase or decrease by approximately $2.7 billion, which would cause an annualized increase or decrease in revenues of approximately $18.8 million at our current weighted average fee rate of 0.71%.
We have not adopted a corporate-level risk management policy regarding client assets, nor have we attempted to hedge at the corporate level the market risks that would affect the value of our overall AUM and related revenues. Some of these risks (e.g., sector risks and currency risks) are inherent in certain strategies, and clients may invest in particular strategies to gain exposure to these risks.
We also are subject to market risk from a decline in the prices of investment securities that we own. These securities consist primarily of equity securities, fixed-income securities, investments in mutual funds, including the Fund for which MNA provides advisory services and short-term investment for cash management purposes. The value of these investments was $38.3 million as of September 30, 2017 of which approximately $7.8 million is investment securities classified as trading, $1.1 million is classified as equity method investments and $29.4 million is investment securities classified as available-for-sale. Management regularly monitors the value of these investments; however, given their nature and relative size, we have not adopted a specific risk management policy to manage the associated market risk. Assuming a 10% increase or decrease in the values of these investment securities, the fair value would increase or decrease by approximately $3.8 million at September 30, 2017. Due to the nature of our business, we believe that we do not face any material risk from inflation.
Exchange Rate Risk
A substantial portion of the accounts that we advise, or sub-advise, hold investments that are denominated in currencies other than the U.S. dollar. Movements in the rate of exchange between the U.S. dollar and the underlying foreign currency affect the values of assets held in accounts we manage, thereby affecting the amount of revenues we earn. The value of the assets we manage was $26.5 billion as of September 30, 2017. As of September 30, 2017, approximately 18% of our AUM across our investment strategies was invested in securities denominated in currencies other than the U.S. dollar. To the extent our AUM are denominated in currencies other than the U.S. dollar, the value of those AUM would decrease, with an increase in the value of the U.S. dollar, or increase, with a decrease in the value of the U.S. dollar.

We monitor our exposure to exchange rate risk and make decisions on how to manage such risk accordingly; however, we have not adopted a corporate-level risk management policy to manage exchange rate risk. Assuming that 18% of our AUM is invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangements, a 10% increase or decrease in the value of the U.S. dollar would increase or decrease the fair value of our AUM by approximately $0.5 billion, which would cause an annualized increase or decrease in revenues of approximately $3.4 million at our current weighted average fee rate of 0.71%.
Interest Rate Risk
The Company was exposed to interest-rate risk primarily due to our AUM that is invested in debt securities, as well as corporate assets that are invested in debt securities and short-term investments. Management considered a hypothetical 100 basis point fluctuation in interest rates and estimated the impact of such a fluctuation on these investments. Management determined there was no material impact as of September 30, 2017. Additionally, given the current level of income we earn from our cash and cash equivalent balances and short-term investments, interest rate changes would not have a material impact on us.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and PrincipalChief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2017March 31, 2022 pursuant to Rule 13a-15 under the Exchange Act. Based on that evaluation, our Chief Executive Officer and PrincipalChief Financial Officer have concluded that, as of September 30, 2017,March 31, 2022, 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 PrincipalChief 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, 2017March 31, 2022 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
We have set forth in Item 1A to our Annual Report on Form 10-K for the year ended December 31, 20162021 risk factors relating to our business, our industry, our structure and our Class A common stock. 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. ThereExcept as discussed below, there have been no material changes in our risk factors since those published in such Form 10-K for the year ended December 31, 2016.2021.
The announcement and pendency of the Merger may adversely affect our business and results of operations.
Uncertainty about the effect of the transactions contemplated by the Merger Agreement on our employees, clients, and other parties may have an adverse effect on our business or results of operations regardless of whether the Merger is completed. These risks include, but are not limited to, the following, all of which could be increased by a delay in or abandonment of the Merger:
our ability to attract, retain, and motivate employees, including key personnel, could be impaired;
significant management time and resources could be diverted to the consummation of the Merger instead of our day-to-day operations;
relationships with clients and other business partners could be affected;
clients may choose to withdraw their funds from our investment solutions instead of consenting to the assignment of their agreements with us to Callodine Midco, Inc (the "Parent");
we may not be able to pursue alternative business opportunities or make appropriate changes to our business;
litigation relating to the Merger could arise; and
significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger have been and may continue to be incurred.

The pendency of the Merger may also exacerbate other risks discussed elsewhere in the "Risk Factors" section of the Form 10-K, any of which could have a material effect on us.
Failure to consummate the Merger within the expected timeframe, or at all, could have a material adverse impact on our business, financial condition, results of operations and the price of our Class A Common Stock.
There can be no assurance that the proposed Merger will be consummated. The consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including the affirmative vote of at least a majority of combined voting power of our outstanding shares, the approval of new investment advisory agreements for our clients, the approval of the Bank Commissioner of New Hampshire, the expiration or termination of the Hart-Scott-Rodino waiting period, the approval of the Financial Industry Regulatory Authority of a continuing membership application by Manning & Napier Investor Services, Inc., and other customary closing conditions. The failure to satisfy all of the required conditions could delay the completion of the Merger for a significant period of time or prevent them from occurring at all. There can be no assurance that these and other conditions to closing will be satisfied in a timely manner or at all.
The Merger Agreement also provides that the Merger Agreement may be terminated by us or by Parent under certain circumstances, and in certain specified circumstances upon termination of the Merger Agreement we would be required to pay Parent a termination fee equal to $8,790,000. If we are required to make this payment, doing so would materially adversely affect our business, financial condition and results of operations.
Our failure to consummate the Merger could result in negative publicity and a negative impression of our company among our clients and in the investment and business community in general. Further, any disruptions to our business resulting from the proposed acquisition, including any adverse changes in our relationships with our clients and employees, could continue or accelerate in the event that the Merger is not completed. In addition, if the transactions contemplated by the Merger Agreement are not completed, and there are no other parties willing and able to acquire us at a price of $12.85 per share or higher, on terms acceptable to us, the share price of our Class A Common Stock would likely decline. Also, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger. Many of these fees and costs will be payable by us even if the proposed Merger is not completed and may relate to activities that we would not have undertaken in the absence of the transactions contemplated by the Merger Agreement.
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Our failure to comply with applicable regulatory requirements associated with the transaction could adversely impact the Company’s ongoing business, financial condition, financial results and stock price.
The Merger is subject to the expiration or termination of applicable antitrust waiting periods and the receipt of approvals, consents or clearances from regulatory authorities that may impose conditions that, if not obtained, could prevent completion of the Merger.
Before the Merger may be completed, any applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Act relating to the completion of the Merger must have expired or been terminated and any authorization or consent from a governmental authority required to be obtained with respect to the Merger must have been obtained. The terms and conditions of the authorizations and consents that are granted, if any, may impose requirements, limitations or costs or place restrictions on the conduct of the combined company’s business or may materially delay the completion of the Merger.
In addition, at any time before or after the completion of the Merger, and notwithstanding the termination of applicable waiting periods, the applicable U.S. regulatory authorities or any state attorney general could take such action under antitrust laws as such party deems necessary or desirable in the public interest. Such action could include, among other things, seeking to enjoin the completion of the Merger. In addition, in some circumstances, a third party could initiate a private action challenging, seeking to enjoin, or seeking to impose conditions on the Merger. Parent and the Company may not prevail and may incur significant costs in defending or settling any such action.
There can be no assurance that the conditions to the completion of the Merger set forth in the Merger Agreement relating to applicable regulatory requirements will be satisfied.
Litigation related to the Merger may prevent the Merger from being consummated at all or within the expected timeframe and may result in substantial costs to us.
Litigation is common in connection with sales of publicly traded companies similar to us. We and our directors and officers may become parties to lawsuits relating to the Merger, which, even if these lawsuits are without merit, could be time consuming, expensive and divert the attention of our management from operating our business. Stockholder litigation challenging the proposed Merger may delay completion of the Merger in the expected timeframe or at all, particularly if the plaintiffs in any such litigation are successful in obtaining an injunction prohibiting the parties from consummating the Merger on the terms contemplated by the Merger Agreement. If we experience the potential consequences of any of the foregoing risks, our results of operations, financial condition and prospects could be materially and adversely affected.
The Merger Agreement contains provisions that could discourage a potential competing transaction.
Under the terms of the Merger Agreement, after the 40-day go-shop process, we have agreed not to solicit or encourage discussions with third parties regarding other acquisition proposals; provided that we may under certain circumstances and in compliance with certain obligations, provide non-public information and engage in discussions and negotiations with respect to an unsolicited acquisition proposal that constitutes or is reasonably expected to lead to a proposal that is superior to Parent’s proposal. We are subject to certain restrictions on our ability to respond to such proposals, except in circumstances permitted by the Merger Agreement. In the event that we receive a competing proposal from a third party that our Board of Directors concludes in good faith is superior to Parent’s proposal, we must notify Parent of that proposal and negotiate in good faith with Parent prior to recommending any such competing proposal to our stockholders. In the event that we were to accept a competing proposal, or our Board of Directors otherwise determines that completing the Merger would not be in the best interest of our stockholders, we would be required to pay a termination fee equal to $8,790,000. We may still owe the $8,790,000 termination fee to Parent if the Merger Agreement is terminated by the Parent because we breached the Merger Agreement or the Board recommends a proposal superior to Parent’s proposal to our stockholders, and if we engage in certain transactions within 12 months after the termination of the Merger Agreement.
These provisions could discourage potential bids or offers from other third parties, including third parties that might otherwise be willing to offer consideration with a higher value than the $12.85 per share payable by Parent pursuant to the Merger Agreement. In addition, if the Merger Agreement is terminated and we decide to pursue another business combination transaction, we may be unable to negotiate a transaction with another party on terms comparable to those contemplated by the Merger Agreement.
Our executive officers and directors may have interests that are different from, or in addition to, those of our stockholders generally.
Our executive officers and directors may have interests in the Merger that are different from, or are in addition to, those of our stockholders generally. These interests include direct or indirect ownership of our Class A Common Stock, which entitles them to the cash consideration in the Merger, and restricted stock units, which would be canceled and replaced with an equivalent award of an affiliate of the Parent (“TopCo”). In addition, our executive officers may have certain rights to severance and other payments in the event that their employment is terminated following the consummation of the contemplated Merger.
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Our executive officers who hold shares of Class A Common Stock entered into a support agreement (“Support Agreement”), pursuant to which they have agreed to vote each of the shares they beneficially own in favor of the Merger, the approval of the Merger Agreement and any other matters necessary for the consummation of the Merger and other transactions contemplated by the Merger Agreement.
In particular, our Chairman and Chief Executive Officer has interests in the Merger that may differ from our stockholders generally. Mr. Mayer entered into a rollover agreement with Parent pursuant to which Mr. Mayer agreed to contribute (at the closing of the Merger) 175,902 shares of Class A Common Stock and 500,000 options to purchase Class A Common Stock to TopCo in exchange for equity interests and options in TopCo. Mr. Mayer also entered into the Support Agreement. Finally, Mr. Mayer entered into an employment agreement with Parent, effective as of the closing of the Merger (“Employment Agreement”). Pursuant to the Employment Agreement, Mr. Mayer will (i) serve as chief executive officer of the surviving company following the closing of the Merger, (ii) receive a base salary of $600,000 per annum, (iii) be eligible to receive a cash bonus with a target range for 2022 of between $3,000,000 to $3,500,000, and (iv) be eligible to participate in the surviving company’s employee benefits plans. The Employment Agreement also provides that if Mr. Mayer’s employment is terminated by the employer without cause, or if Mr. Mayer resigns for good reason, Mr. Mayer will receive cash severance in the amount of $5 million payable over the two-year period following the termination date. In addition, the Employment Agreement provides for up to 40% of each annual incentive to be deferred and paid in the form of a vested award pursuant to the Company’s deferred incentive compensation program and/or one or more employer equity instruments.
We are subject to contractual restrictions while the Merger is pending.
The Merger Agreement generally requires us to operate our business in the ordinary course of business consistent with past practice, but restricts us from taking specified actions while the Merger is pending without the consent of Parent, including, among other things, restrictions on our ability to acquire other businesses and assets, dispose of our assets, enter into, modify, or terminate certain contracts, repurchase or issue securities, declare or pay dividends or distributions over specified limits, incur certain indebtedness, accelerate or increase the compensation of certain employees, among other customary restrictions. These restrictions may prevent us from pursuing attractive business opportunities or responding effectively and/or timely to competitive pressures and industry developments that may arise prior to the completion of the pending Merger or otherwise adversely affect our ability to execute on our business strategy, which could adversely affect our business or financial condition.

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Item 6. Exhibits
Exhibit No.Description
2.1
Exhibit No.Description
10.1
31.110.2
10.3*
31.1
31.2
32.1
32.2
101Materials from the Manning & Napier, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017,March 31, 2022, 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 StatementStatements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) related Notes to the Unaudited Consolidated Financial Statements.
104Cover Page Interactive Data File (included in Exhibit 101)

* Management contract or compensatory plan or arrangement







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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 8, 2017May 10, 2022By:/s/ WILLIAM MANNINGMarc Mayer
William ManningMarc Mayer
Chief Executive Officer
(principal executive officer)
/s/ BETH H. GALUSHAPaul J. Battaglia
Beth H. GalushaPaul J. Battaglia
PrincipalChief Financial Officer
(principal financial and accounting officer)


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