Manning & Napier Inc., which for years has been beset by asset declines and turnover of senior personnel, is taking steps to become a "leaner organization" while targeting the wealth management arena for growth, said Marc Mayer. the firm's new CEO.
The business strategy comes as the Fairport, N.Y.-based active money manager, which offers equity, fixed-income and multiasset strategies, has seen its assets under management drop to $21.3 billion as of June 30, down more than 60% from its peak of $54.1 billion five years ago. Shares of the company have also plummeted 35.7% on an annualized basis, 89.7% on a total basis, as of Aug. 28 to $1.77 from $17.26 on June 30, 2014.
"We need to be a leaner organization but we don't have a specific (headcount) goal," said Mr. Mayer, who was appointed CEO on Jan. 31 after having served as head of North American distribution for Schroders in New York.
In the second quarter of 2018, Manning & Napier began offering early retirement packages to some employees in an effort to improve profitability, and also made additional "workforce reductions," company officials said during an earnings call at the time.
Just less than 20 employees accepted the early retirement offering, and around 20 additional positions were eliminated, allowing for $6 million in annual savings. At that time, the workforce reductions did not affect the firm's sales or investment teams, Chief Financial Officer Paul J. Battaglia said during the call.
Despite strategic staff cuts over the past year or so, which have been distributed across the organization and "not isolated to asset management vs. wealth management (roles)," workforce reduction measures are expected to continue, Mr. Mayer confirmed in an Aug. 21 phone interview.
Manning & Napier's employee count has dropped to 336 people as of June 30 from 508 employees in mid-2014, the company has reported in earnings releases.
"We are a public company. Our level of profitability is not acceptable to us, so actions must be taken," Mr. Mayer said.
"We will need to run leaner but ... we see really interesting and substantial opportunities for investment as well," he said of efforts to grow through the wealth channel.
Mr. Mayer said the firm has "identified very material growth opportunities in wealth management, where we would expect to see over time … substantial investment and growth in that business and building out an adviser force."
The majority of Manning & Napier's wealth clients — which make up around half of its $21.3 billion in AUM — are individuals and families, but also include some institutions, such as endowments, foundations and businesses, Mr. Mayer said. (As of June 30, 2014, approximately 35% of the firm's AUM was with wealth clients, while the remainder was institutional assets, according to a spokesman.)
Historically, Manning & Napier has called its wealth management business its "direct business," as it comprises direct client relationships unmediated by investment consultants.
According to Mr. Mayer, despite the focus on wealth, he still believes there are opportunities to "judiciously" develop new strategies targeting the midsize to larger institutions it also serves, although building scale in the traditional, long-only active space is "challenging" in the current marketplace.
In another effort to reduce expenses, Manning & Napier also agreed on June 28 to sell a subsidiary, Perspective Partners LLC — an employee benefits software and service provider — to Manning Partners LLC, the company disclosed in a Form 8-K filing with the Securities and Exchange Commission. Manning Partners is owned by William Manning, co-founder and chairman of the board at Manning & Napier. The sale is expected to close this quarter for an estimated $3.2 million.
Amid the firm's turnaround efforts, Mr. Mayer said Manning & Napier is "not actively pursuing any types of acquisitions in asset management at this time." Additionally, "the firm is not for sale," he said in the interview.