WEBVTT - Team Favorite: Jenny Johnson on Managing a Trillion-Dollar Firm 0:00:02.000 --> 0:00:05.960 This is Master's in Business with Barry rid Holds on 0:00:06.200 --> 0:00:11.720 Bloomberg Radio. This week on the podcast, once again, I 0:00:11.800 --> 0:00:16.640 have an extra extra special guest. Jenny Johnson is CEO 0:00:17.120 --> 0:00:21.000 of investment giant Franklin Templeton. They run about a trillion 0:00:21.040 --> 0:00:26.160 and a half dollars. She's been CEO since February twenty twenty. 0:00:26.239 --> 0:00:30.280 She's been with the firm for decades. Just an incredible 0:00:30.400 --> 0:00:34.080 insightful conversation about how to build a company, how to 0:00:34.120 --> 0:00:38.160 grow through acquisitions, how to make sure everybody on your 0:00:38.200 --> 0:00:42.800 team understands their role is appreciated and is acting and 0:00:42.880 --> 0:00:47.320 performing at the highest levels. I found this conversation to 0:00:47.360 --> 0:00:51.880 be absolutely not only insightful and informative, but also delightful, 0:00:52.159 --> 0:00:55.400 and I think you will also with no further ado, 0:00:55.760 --> 0:01:01.720 my conversation with Franklin Templeton's CEO, Jenny Jen Jenny Johnson, 0:01:02.080 --> 0:01:03.920 Welcome to Bloomberg. 0:01:04.280 --> 0:01:05.840 Thank you, Berry. It's great to be here. 0:01:06.240 --> 0:01:08.360 It's great to have you. I've been looking forward to 0:01:08.440 --> 0:01:10.920 this for a long time. I've been back and forth 0:01:10.959 --> 0:01:12.920 for a while, and then we had the pandemic hit. 0:01:13.400 --> 0:01:17.640 Let's talk a little bit about your background. You joined 0:01:17.920 --> 0:01:21.800 Franklin Templeton in nineteen eighty eight. Family members helped found 0:01:21.840 --> 0:01:24.640 the farm, have run it for a long time. And 0:01:24.680 --> 0:01:26.800 back then it was frank was a Franklin temple it. 0:01:26.760 --> 0:01:30.720 Was, and it just we acquired tuble To nineteen ninety two. Right, 0:01:31.080 --> 0:01:34.399 So I spent a year. My father said to me, look, 0:01:34.400 --> 0:01:36.600 if you're going to be in the financial services business, 0:01:36.880 --> 0:01:40.000 you should probably work in New York. And so I 0:01:40.040 --> 0:01:43.000 spent a year working for Drexlburnham. 0:01:43.080 --> 0:01:44.640 And that, by the way, that's tough when you're a 0:01:44.720 --> 0:01:47.760 West coast coast gal used the sunshine and nice weather. 0:01:47.880 --> 0:01:51.080 Right, Although I was born in New Jersey, Jersey, I 0:01:51.160 --> 0:01:54.640 was born in Montclair, Okay. So, and I lived in 0:01:54.640 --> 0:01:57.320 New Jersey till I was about nine. So I came 0:01:57.360 --> 0:01:59.160 back and lived in Jersey City. 0:01:58.960 --> 0:02:02.880 And said, now I remember why we moved to California, Right. 0:02:02.840 --> 0:02:05.120 Hey, there's some beautiful parts of Jersey. 0:02:04.920 --> 0:02:08.079 There are it's the weather. It's really the big Yes, Yeah, 0:02:09.160 --> 0:02:11.880 it's hard to beat that, you know, sunshine three hundred 0:02:11.919 --> 0:02:16.440 days a year, to say the least. So, since we're 0:02:16.440 --> 0:02:20.359 talking about weather. Aside from the weather, what are the 0:02:20.400 --> 0:02:25.000 cultural differences like, especially in finance, because California finance very 0:02:25.000 --> 0:02:27.440 different than New York finance culturally. 0:02:27.040 --> 0:02:30.680 Sure, I mean I think so Franklin's headquartered in Silicon Valley. 0:02:31.200 --> 0:02:35.280 I actually think that what influences it more than anything 0:02:35.360 --> 0:02:38.120 now is the tech culture that's going on on the 0:02:38.160 --> 0:02:40.880 West Coast. And you know, it's kind of funny if 0:02:40.919 --> 0:02:43.160 you and now you see it in New York City, 0:02:43.160 --> 0:02:46.239 but you know, if you showed up in a meeting 0:02:46.280 --> 0:02:49.519 in a coat and tie, you know, post the dot 0:02:49.560 --> 0:02:51.480 com era and kind of you know, coming into the 0:02:51.480 --> 0:02:56.040 more recent stuff, you're viewed as sort of the old economy, right, 0:02:56.200 --> 0:02:58.640 And you know, now we see everybody walk around New 0:02:58.680 --> 0:03:01.120 York City, hardly anybody where's a tie. Uh, you know, 0:03:01.200 --> 0:03:02.080 the vest. 0:03:01.760 --> 0:03:07.000 Is the new already they may post right, it's kind 0:03:07.000 --> 0:03:11.160 of moved to Lululemon, Pansen and you know, button down 0:03:11.200 --> 0:03:12.800 shorts is about as dressed up. 0:03:12.960 --> 0:03:15.480 So I don't think anybody expected the West Coast to 0:03:15.600 --> 0:03:18.280 lead the East Coast on uh, you know, culture and attire. 0:03:18.320 --> 0:03:20.840 But I think that's happened a little bit on the 0:03:20.919 --> 0:03:24.760 tech otherwise, you know, it the West Coast. You know, 0:03:24.800 --> 0:03:26.680 if you were in the financial services business, it was 0:03:26.800 --> 0:03:29.640 rough life you were you were in the office by 0:03:29.840 --> 0:03:31.720 a lot of people get up at nine am lunch. 0:03:31.800 --> 0:03:34.640 Yeah, right, I used to let But the good news 0:03:34.720 --> 0:03:36.560 is you finish it one you could go out surfing. 0:03:36.680 --> 0:03:37.320 Yeah, there you go. 0:03:37.520 --> 0:03:40.240 Always a thing. So you're at Drexel for a year 0:03:40.280 --> 0:03:42.960 in New York, you come back to Franklin Templeton. What 0:03:43.000 --> 0:03:47.840 was your first role at ft O god or Franklin. 0:03:48.160 --> 0:03:52.560 I was an executive administrative coordinator, right, so I was 0:03:52.600 --> 0:03:55.400 working for the COO kind of on special projects, right. 0:03:55.840 --> 0:03:58.560 And then I moved into we had a bank at 0:03:58.560 --> 0:04:02.640 the time, and I moved into running part of the bank. 0:04:02.720 --> 0:04:05.160 And I got to tell you we then spun out 0:04:05.160 --> 0:04:08.480 in auto financing business, and as a CEO today, I 0:04:08.520 --> 0:04:10.560 have to say that period of my career running the 0:04:10.560 --> 0:04:13.960 auto finance business was probably the most significant. I also 0:04:14.000 --> 0:04:16.120 ran our credit card business at the time. 0:04:16.200 --> 0:04:18.120 Both both difficult businesses. 0:04:17.960 --> 0:04:21.719 And learning how to do things as a CEO. One is, 0:04:22.960 --> 0:04:25.680 we were securitizing the assets and the auto loan and 0:04:25.960 --> 0:04:28.360 selling them off to other asset managers. We weren't able 0:04:28.360 --> 0:04:30.560 to buy them ourselves. And I remember being on the 0:04:30.600 --> 0:04:33.280 phone thinking, you know, as the as the pms were 0:04:33.279 --> 0:04:35.320 asking questions about cash flows and things. So I was thinking, 0:04:35.320 --> 0:04:38.200 you're asking all the wrong questions about whether this portfolio 0:04:38.240 --> 0:04:40.839 will perform because it's things like down payment, you know, 0:04:40.880 --> 0:04:43.160 there's there's you know, the credit score, average credit card, 0:04:43.400 --> 0:04:46.960 what they risk exactly, And so it was really good 0:04:47.000 --> 0:04:49.600 to kind of learn that side of the business. And then, 0:04:49.640 --> 0:04:52.400 of course as a CEO, it doesn't matter the size 0:04:52.440 --> 0:04:54.919 of the company. You're always talking about word allocate capital, 0:04:54.960 --> 0:04:57.240 you know, should you add more to marketing or in 0:04:57.360 --> 0:05:01.239 you know, collections, right, and those are the same problems 0:05:01.240 --> 0:05:03.719 for big companies as little companies, And so I always 0:05:03.720 --> 0:05:06.200 felt like it was great learning experience. And then the 0:05:06.200 --> 0:05:08.680 biggest thing in the credit card business in the late 0:05:08.800 --> 0:05:12.440 nineties or early nineties, those who were great at data 0:05:12.680 --> 0:05:16.080 and data analytics, uh huh dominated the industry and essentially 0:05:16.080 --> 0:05:17.760 put others out of it. And so I became a 0:05:17.800 --> 0:05:21.159 big fan of data and how predictive it can be. 0:05:21.240 --> 0:05:23.400 For all the obvious reasons. Right, if you have an 0:05:23.480 --> 0:05:25.640 edge in data, you have an edge across the whole 0:05:25.680 --> 0:05:30.479 business line, for sure. So Franklin obviously divests out of 0:05:30.520 --> 0:05:34.560 the banking business, the credit card business, the ODO financing business. 0:05:34.560 --> 0:05:37.480 What led to that decision? Did you guys just say 0:05:37.760 --> 0:05:39.960 we really want to be pure investment management. 0:05:40.400 --> 0:05:43.800 Well, wet. Part of it was, I think regulatory the 0:05:43.880 --> 0:05:47.640 requirements for asset managers to have a bank were such 0:05:47.680 --> 0:05:50.840 that it was it would it would inhibit us a. 0:05:50.760 --> 0:05:53.560 Bit post SNL crisis, Yeah, came up exactly. 0:05:53.640 --> 0:05:59.159 Yeah, And honestly, I think we divested post financial crisis. 0:05:59.440 --> 0:06:01.760 So once the rules, yeah, so we kept it for 0:06:01.800 --> 0:06:05.239 a long time. But once the rule, search became difficult 0:06:05.240 --> 0:06:08.080 around things like seeding new funds. You had to within 0:06:08.160 --> 0:06:10.080 a year. You couldn't be more than ten percent of 0:06:10.120 --> 0:06:11.880 the fund. Well, that's hard to do in our business 0:06:12.040 --> 0:06:14.159 because people look for a track record, so you seed 0:06:14.200 --> 0:06:16.080 and get a track record. And we just looked at 0:06:16.080 --> 0:06:18.880 it and said, you know, it's not material enough to 0:06:19.400 --> 0:06:23.360 have it, cause it the complications that it causes on 0:06:23.360 --> 0:06:24.160 our asset management. 0:06:24.240 --> 0:06:26.039 It sounds like it was an easy decision to cut 0:06:26.040 --> 0:06:26.400 it loose. 0:06:27.160 --> 0:06:30.159 Yeah, except that we do have fiduciary trust, which is 0:06:30.160 --> 0:06:31.200 a high net worth business. 0:06:31.480 --> 0:06:31.600 Huh. 0:06:31.760 --> 0:06:34.760 And it's always nice to have a lending arm when 0:06:34.760 --> 0:06:36.160 you have a high net worth business. 0:06:36.440 --> 0:06:40.440 All right, So we're going to get into the acquisitions 0:06:40.880 --> 0:06:44.479 a little later. But from when you first started as 0:06:44.520 --> 0:06:50.960 an administrative organizational assistant. Whatever, right, right, fetch me some 0:06:51.000 --> 0:06:54.880 coffee please, that sort of And although I would imagine 0:06:54.880 --> 0:06:58.440 that you still you know, you warn't the bottom bottom 0:06:58.480 --> 0:07:00.520 of the tone and poll because people knew obviously knew 0:07:00.560 --> 0:07:03.040 who you were and knew who the family was. But 0:07:03.880 --> 0:07:07.039 from when you first started at was a let me 0:07:07.040 --> 0:07:11.000 get my feet wet sort of roll. How has Franklin 0:07:11.320 --> 0:07:13.280 changed over the ensuing decades. 0:07:13.360 --> 0:07:16.280 Well, I have to say, when you say you know, 0:07:16.760 --> 0:07:19.920 you're right, you know, in a business where founders are 0:07:19.920 --> 0:07:21.960 still involved in your family member, you're gonna be treated 0:07:22.000 --> 0:07:24.560 a little differently. But my father always was adamant you 0:07:24.600 --> 0:07:26.760 have to work harder than everybody else because people would 0:07:26.760 --> 0:07:28.880 look at how hard you work and work just a 0:07:28.880 --> 0:07:30.760 little less, like they won't feel like they have to 0:07:30.760 --> 0:07:34.720 do more. And I remember my first job was a 0:07:34.760 --> 0:07:37.000 summer job and I took over from my older sister 0:07:37.000 --> 0:07:38.600 who was twenty one at the time, and I was, 0:07:39.040 --> 0:07:41.880 I don't know, fifteen or sixteen, and he was paying 0:07:41.920 --> 0:07:43.960 her five dollars an hour and he was paying me 0:07:44.000 --> 0:07:45.720 two dollars and fifty cents an hour. And I said 0:07:45.760 --> 0:07:47.640 to him, look, I think I'm I think I'm a 0:07:47.680 --> 0:07:49.960 harder worker, and I think I should get five dollars 0:07:50.040 --> 0:07:51.920 an hour, and he said, well, you can always get 0:07:51.920 --> 0:07:55.480 a job somewhere else. So that's what I learned. Okay, 0:07:55.640 --> 0:07:56.720 there's certain Dad. 0:07:56.640 --> 0:08:01.560 Was no nonsense, no noice. Serious here hit the bricks exactly. 0:08:01.760 --> 0:08:05.640 That's really interesting. But by the way, that's really astute observation. 0:08:06.280 --> 0:08:09.239 People are gonna look at how hard you're gonna you're working, 0:08:09.360 --> 0:08:12.120 and they think I could work a little less hard. See, 0:08:12.120 --> 0:08:13.640 I would think they would want to work a little 0:08:13.640 --> 0:08:17.880 harder than you, just so no one accuses them of slacking. 0:08:18.400 --> 0:08:22.160 But maybe it's a generational thing. Who who knows, And 0:08:22.200 --> 0:08:25.960 we're not that far. I think we're about the same age. 0:08:26.640 --> 0:08:30.360 I was always taught, hey, find the hardest, fastest guy 0:08:30.440 --> 0:08:32.760 out there and just do a little more than him. 0:08:33.200 --> 0:08:35.400 So you don't want to be on the underside. You 0:08:35.440 --> 0:08:40.240 are be passing that. So uh so, so were you 0:08:40.320 --> 0:08:42.840 In the early days, it was mutual funds, It was SMAs. 0:08:42.880 --> 0:08:44.920 What what were you guys? Really just mutual funds? I 0:08:44.920 --> 0:08:48.360 mean that's that was the That was the vehicle of choice. 0:08:48.600 --> 0:08:52.720 And you know it evolved over time, uh to things 0:08:52.720 --> 0:08:55.880 like SMAs and ETFs and collective investment trust. Now now 0:08:55.920 --> 0:08:58.640 you have to be able to provide all of those 0:08:58.720 --> 0:09:04.160 vehicles as outlets for your investment capabilities. And I think 0:09:04.200 --> 0:09:06.640 a lot of that change happened. It was starting to happen, 0:09:06.920 --> 0:09:11.960 but accelerated after the Global Financial crisis, where regulators pushed 0:09:12.280 --> 0:09:17.120 for more transparency in distribution fees, and so you saw 0:09:17.160 --> 0:09:20.760 this shift from kind of fees embedded in say the 0:09:20.840 --> 0:09:24.319 mutual fund vehicle, to being external on the client statement. 0:09:24.760 --> 0:09:29.280 And so then advisors wanted things like ETFs and SMAs 0:09:29.320 --> 0:09:31.000 and other things because a client was seeing that they 0:09:31.040 --> 0:09:33.480 were paying their advisor every month, and so that's changed. 0:09:33.679 --> 0:09:36.040 I think that's been a dramatic change in the industry 0:09:36.080 --> 0:09:37.200 on the type of vehicle we use. 0:09:37.400 --> 0:09:40.960 I always thought that the marketplace would fix that on 0:09:41.040 --> 0:09:44.080 its own, and I've been wrong about this for decades. 0:09:44.120 --> 0:09:47.760 I always assumed people would see, oh, five percent front 0:09:47.800 --> 0:09:51.559 load on a C share or a two and a 0:09:51.600 --> 0:09:54.720 half percent annual. I assume people would see that and 0:09:54.720 --> 0:09:59.959 steer away. But it doesn't appear that that really happened 0:10:00.240 --> 0:10:05.119 until the Financial crisis. That seems to be where indexing 0:10:05.160 --> 0:10:07.679 really took off and where people became a lot more 0:10:07.720 --> 0:10:08.199 price sensing. 0:10:08.440 --> 0:10:10.400 Well, I think you were seeing a big shift to 0:10:10.640 --> 0:10:13.480 C shares where you know, you had a bigger back 0:10:13.559 --> 0:10:16.240 end trail and a smaller upfront, So that was happening 0:10:16.280 --> 0:10:18.319 a bit. And you know, look, I'm a big believer 0:10:18.720 --> 0:10:23.560 that some of those type commission products are still important. 0:10:23.760 --> 0:10:27.000 We look in the UK where they have something called RDR, 0:10:27.080 --> 0:10:29.959 so they don't permit any kind of commission based selling, 0:10:30.480 --> 0:10:32.280 and so it's all gone to fee based and you 0:10:32.360 --> 0:10:36.160 have a huge percentage of population or orphan from advice 0:10:36.840 --> 0:10:40.320 because essentially an advisor says, ah, that's too small of account, 0:10:40.320 --> 0:10:42.439 it's not worth my time, whereas if they got that 0:10:42.559 --> 0:10:45.480 upfront commission, they'd spend the time doing it. And the 0:10:45.600 --> 0:10:49.760 key is the difference for people investing early. So if 0:10:49.800 --> 0:10:52.880 you invest for ten years from age twenty five to 0:10:53.040 --> 0:10:56.520 thirty five, say five thousand dollars a year, or you 0:10:56.559 --> 0:11:00.839 wait till thirty five and invest for thirty years at 0:11:00.880 --> 0:11:03.000 five thousand dollars a year, you will have more money 0:11:03.040 --> 0:11:05.319 if you start for those investments over those ten year 0:11:05.320 --> 0:11:08.240 period because of the compounding. And so getting people to 0:11:08.320 --> 0:11:12.120 invest early is really really important and you don't want 0:11:12.160 --> 0:11:16.120 to have mechanisms regulatory environments that kind of prohibit them 0:11:16.160 --> 0:11:17.120 getting advice early. 0:11:17.559 --> 0:11:21.680 Huh. That's interesting. Although in today's digital world, as you 0:11:21.720 --> 0:11:24.760 guys know, there's so many ways to invest with no 0:11:24.960 --> 0:11:29.680 minimum fees, and a lot of people, especially of the 0:11:29.720 --> 0:11:34.600 younger generation, are very comfortable as di wires not do 0:11:34.679 --> 0:11:38.079 it yourselfers. Not that robinhood is how they should be 0:11:38.200 --> 0:11:41.760 necessarily investing, but hey, it gets some interested in finance. 0:11:41.800 --> 0:11:44.640 It gets them thinking about money. That's not a terrible thing. 0:11:44.720 --> 0:11:47.880 No, it's not a terrible it's actually great. And especially 0:11:47.920 --> 0:11:51.160 because you can do some basic kind of asset allocation 0:11:51.280 --> 0:11:54.839 models that the roboadvisor can be terrific for somebody who 0:11:54.920 --> 0:11:59.160 doesn't have a complicated financial situation. What you tend to 0:11:59.200 --> 0:12:03.040 see is people earn more and have more and more savings. 0:12:03.480 --> 0:12:05.800 Somebody said to me anecdotally, if you have you know, 0:12:05.880 --> 0:12:08.480 sort of three years worth of savings if your income, 0:12:08.760 --> 0:12:11.400 that's when you start to look for advice because you realize, 0:12:11.679 --> 0:12:14.200 you know what, this is more complicated. I'd rather have 0:12:14.200 --> 0:12:17.560 somebody who's full time focused on this than me as 0:12:17.559 --> 0:12:19.199 a part time person managing my money. 0:12:19.360 --> 0:12:21.160 I just have to share a funny story. We just 0:12:21.200 --> 0:12:25.240 got back from vacation, not like terribly long, but eight 0:12:25.320 --> 0:12:27.640 or nine days, and you come back to all this 0:12:27.840 --> 0:12:33.120 mail and it's, oh, here's the irs state the pass through. 0:12:33.160 --> 0:12:35.360 I got to forward that to the accountant. Oh and 0:12:35.440 --> 0:12:38.480 here's a disclosure about this fun we have. And then 0:12:38.559 --> 0:12:41.320 here's the quarterly thing coming up. And all of a sudden, 0:12:41.720 --> 0:12:44.600 like in a rush, I figured out, Oh, this is 0:12:44.640 --> 0:12:47.840 why people pay a fee for someone to give them advice. 0:12:48.240 --> 0:12:50.280 I don't want to deal with. I'm like relaxed, I'm 0:12:50.280 --> 0:12:52.760 back from vacation. The last thing I want to do 0:12:52.800 --> 0:12:56.439 is start thinking about New York State, pe Tech passed through. 0:12:56.920 --> 0:12:59.760 Just take this off. What is it going to cost? Great? 0:13:00.120 --> 0:13:01.560 Get this off my plate. I don't want to deal 0:13:01.600 --> 0:13:01.719 with that. 0:13:01.920 --> 0:13:03.600 Well, and I think a lot of people when like 0:13:03.679 --> 0:13:05.959 TurboTax came out, they said, oh, it's going to be 0:13:06.000 --> 0:13:08.400 the end of the CPA. Who are the number one 0:13:08.480 --> 0:13:11.560 users of turbotaxes CPAPA? Yeah, Because in the end people 0:13:11.600 --> 0:13:13.800 sit there and say, wait a second, Actually, the more 0:13:13.880 --> 0:13:16.640 money people have, the more they have options to do 0:13:16.720 --> 0:13:19.640 other things, and they think the opportunity cost of spending 0:13:19.679 --> 0:13:22.240 their time trying to manage those things is not worth it. 0:13:22.240 --> 0:13:25.760 It's the time. It's it's the time is crucial. Plus 0:13:26.080 --> 0:13:28.440 the rules change every year and wants to have to 0:13:28.480 --> 0:13:31.400 stay current with that. I find it's just like, you 0:13:31.440 --> 0:13:34.319 know what, and it's funny. This is like a later 0:13:34.400 --> 0:13:37.000 in life realization when you're young and have all the 0:13:37.040 --> 0:13:38.760 time in the world and not a lot of money, 0:13:39.040 --> 0:13:40.720 I could figure this out. I have to do my 0:13:40.760 --> 0:13:43.640 own taxes. And then when you're old, it's like, whatever 0:13:43.679 --> 0:13:46.280 it costs, just do it. Get this, get this junk 0:13:46.320 --> 0:13:48.960 away from me. So so let's talk a little bit 0:13:49.120 --> 0:13:55.040 about the history of acquisitions at Franklin Templeton. Just about 0:13:55.040 --> 0:14:00.920 thirty years ago, Franklin acquired Templeton, Galbrith and Hansburger. That 0:14:01.120 --> 0:14:04.280 new name of the company became Franklin Templeton. So it 0:14:04.320 --> 0:14:08.160 was Franklin along with mutual fund pioneer Sir John Templeton. 0:14:09.000 --> 0:14:11.040 You were kind of young in the farm in ninety 0:14:11.040 --> 0:14:13.160 two when this took place. What do you recall from 0:14:13.200 --> 0:14:17.040 that fairly substantial back then, a billion dollar acquisition was 0:14:17.160 --> 0:14:17.680 not nothing. 0:14:17.800 --> 0:14:20.680 Yeah, no, it was huge, and uh it was interesting 0:14:20.720 --> 0:14:23.400 because a lot of people, uh we we sort of 0:14:23.440 --> 0:14:26.680 came into that late as far as one of the 0:14:26.720 --> 0:14:32.960 potential acquirers. So, you know, we basically viewed it as 0:14:33.360 --> 0:14:37.640 Franklin had was very strong and fixed income, domestic equity, 0:14:38.000 --> 0:14:41.120 and what Templeton did was open up this international investing, 0:14:41.120 --> 0:14:44.400 which was really pretty new. So yeah, they were they 0:14:44.440 --> 0:14:47.040 were you know, you you there were pioneers in emerging 0:14:47.040 --> 0:14:50.520 markets and and uh and really kind of global equity. 0:14:50.800 --> 0:14:53.640 And when we acquired it, a lot of people were 0:14:53.640 --> 0:14:58.560 skeptical because asset management acquisitions don't always work right and 0:14:58.640 --> 0:15:01.280 expected big cultural difference, and it was expensive. And I 0:15:01.280 --> 0:15:04.480 have to say that my dad understood and we It's 0:15:04.480 --> 0:15:07.920 been our philosophy, you know, throughout all our acquisitions in 0:15:07.960 --> 0:15:10.200 the asset management business, what are you buying. You're buying 0:15:10.240 --> 0:15:15.040 people their investment capability and their investment process, So don't 0:15:15.040 --> 0:15:17.320 destroy value by going in and messing with it. So 0:15:17.360 --> 0:15:21.320 we really left it standalone on the investment side and 0:15:21.320 --> 0:15:24.760 then integrated the rest of the firm and that worked 0:15:24.760 --> 0:15:25.560 out really well. 0:15:25.800 --> 0:15:29.920 That's so different of an approach than we typically hear, 0:15:30.480 --> 0:15:33.840 which is, we want to buy a company for the assets, 0:15:33.920 --> 0:15:37.640 the revenue stream, maybe some technology or intellectual property, and 0:15:37.680 --> 0:15:39.800 we're going to just mash you into our culture whether 0:15:39.840 --> 0:15:42.880 you like it or not, that seems like a little 0:15:42.880 --> 0:15:46.840 more nuanced approach that your dad took. I don't see 0:15:46.840 --> 0:15:50.480 a lot of other mergers in the finance space that 0:15:50.720 --> 0:15:55.840 are that hands off. Maybe the big acquisition of Pimco 0:15:56.560 --> 0:16:00.600 twenty years ago was maybe a little too much hands off, 0:16:00.640 --> 0:16:03.240 But for the most part, it seems like everybody just 0:16:03.320 --> 0:16:04.480 mashes everybody together. 0:16:04.640 --> 0:16:07.240 Yeah, I mean, I you know, in our case, I 0:16:07.240 --> 0:16:09.760 wouldn't say it's totally hands off. It's hands off on 0:16:09.800 --> 0:16:14.120 the investment process, uh huh, right, and really trying to 0:16:14.160 --> 0:16:16.960 integate and integrate the rest of it, and then trying 0:16:17.000 --> 0:16:20.200 to figure out ways that you can add value because 0:16:20.200 --> 0:16:22.880 you have scale so that these firms you know, don't have. 0:16:22.920 --> 0:16:25.360 That was less of an issue in the Templeton deal, 0:16:25.360 --> 0:16:28.200 but with our more recent acquisitions that's been really important. 0:16:28.240 --> 0:16:31.440 What can we do because we're bigger, that can enhance 0:16:31.560 --> 0:16:32.880 the various investment teams. 0:16:32.920 --> 0:16:35.920 So let's talk about some of those more recent acquisitions. 0:16:35.960 --> 0:16:39.480 Twenty twenty, you buy leg Mason. I think it was 0:16:39.520 --> 0:16:42.120 an old cash deal four and a half billion dollars 0:16:42.160 --> 0:16:44.400 is that around, right, And then we took on some debt. Yeah, 0:16:45.720 --> 0:16:48.640 what was the thinking that what did leg Mason bring 0:16:48.720 --> 0:16:50.440 that you guys needed or didn't have. 0:16:50.640 --> 0:16:54.280 Yeah, So in the case of LEG, they had Western 0:16:54.320 --> 0:16:57.800 Asset Management, which is you know, core coreplus fixed income, 0:16:57.800 --> 0:17:01.160 which is the largest category. We just didn't have scale there, 0:17:01.160 --> 0:17:02.800 and you have to have scale to be in the 0:17:02.800 --> 0:17:06.199 institutional space. And the other big one that was exciting 0:17:06.240 --> 0:17:08.400 for us was Clarion Partners, which now is an eighty 0:17:08.440 --> 0:17:10.320 two billion dollar I think they were probably forty five 0:17:10.359 --> 0:17:13.920 at the time, forty five billion real estate manager. And 0:17:14.240 --> 0:17:17.080 we knew that we wanted to get into alternative space 0:17:17.680 --> 0:17:20.280 and so getting that as part of the LEG deal 0:17:21.119 --> 0:17:24.520 was really exciting. And then you know unbelievable managers and 0:17:24.680 --> 0:17:29.080 Clearbridge and Martin Curry and brandy Wine, and so we 0:17:29.240 --> 0:17:33.760 just got great expertise there. They were seventy five percent institutional, 0:17:33.840 --> 0:17:37.400 we were seventy five percent retail. So bringing the two 0:17:37.480 --> 0:17:40.840 firms together, you really made us fifty to fifty retail 0:17:40.840 --> 0:17:42.680 and institutional, and that's been very important. 0:17:42.880 --> 0:17:46.800 Huh. And then this year you acquire Putnam for almost 0:17:46.840 --> 0:17:51.560 a billion dollars. Puttenham almost the purchaser of Templeton, which 0:17:51.600 --> 0:17:54.359 is kind of kind of amusing that everybody ended up 0:17:54.359 --> 0:17:57.440 in the same place. That seems to be a very 0:17:57.480 --> 0:18:02.000 strategic purchase. Tell us the thing behind acquiring Putnam, So 0:18:02.440 --> 0:18:04.480 let me step back and just say sort of what 0:18:04.520 --> 0:18:06.000 our strategy is in acquisition. 0:18:06.080 --> 0:18:08.040 So we've done I think ten in the last Putnam 0:18:08.040 --> 0:18:10.480 will be R tenth in the last three years, and 0:18:10.520 --> 0:18:12.439 they've all been focused on. If you think about the 0:18:12.440 --> 0:18:15.679 big macro trends going on in the industry, one is 0:18:16.000 --> 0:18:19.000 private markets are here to stay, and they're here to stay. 0:18:20.400 --> 0:18:23.879 One take private credit. Right the banking crisis of the 0:18:23.920 --> 0:18:28.320 Global financial crisis, had regulators changed capital requirements for banks. 0:18:28.560 --> 0:18:31.919 Banks preserve their capital for the best clients, and it 0:18:32.080 --> 0:18:36.920 created this opportunity for you know, basically private credit outside 0:18:36.920 --> 0:18:40.720 the banking system. And honestly, with the discussion around which 0:18:40.720 --> 0:18:44.440 I have strong opinions on discussion around more capital requirements 0:18:44.480 --> 0:18:47.320 post the regional banking crisis, I think that's only gonna 0:18:47.320 --> 0:18:49.159 get worse and then you'll, well, that's going to. 0:18:49.160 --> 0:18:52.760 Create opportunities for firms that are filling that void exactly. 0:18:53.000 --> 0:18:55.240 And by the way, this really began in the late 0:18:55.320 --> 0:18:59.040 nineties early two thousands as the big banks moved upscale. 0:18:59.640 --> 0:19:02.840 They like to void underneath and private markets stepped right in. 0:19:02.920 --> 0:19:05.000 That's exactly right. And then the other piece of that, 0:19:05.119 --> 0:19:08.000 and you know this was definitely fueled by low interest rates, 0:19:08.000 --> 0:19:12.560 but private equity. The fact is companies can stay private longer. 0:19:12.720 --> 0:19:15.160 And you see that in the numbers. Right, two thousand, 0:19:15.200 --> 0:19:17.760 average company went public after three years. That was probably 0:19:17.800 --> 0:19:20.640 an anomaly in the dot com right. By twenty nineteen 0:19:20.880 --> 0:19:23.400 it was I think nine to ten years, and by 0:19:23.400 --> 0:19:26.240 twenty twenty two was fourteen to fifteen years before they 0:19:26.280 --> 0:19:28.520 were going public. Right, you have half the number of 0:19:28.520 --> 0:19:31.240 public companies that you had in two thousand and so 0:19:31.680 --> 0:19:34.159 you look at it, well, why go public? 0:19:34.359 --> 0:19:34.560 Right? 0:19:35.119 --> 0:19:40.080 A public company has quarterly earning pressure. You know, there's 0:19:40.240 --> 0:19:45.400 a lot of scrutiny around compensation of the staff, there's 0:19:45.440 --> 0:19:48.719 a lot of uh, there's an expectation on political you know, 0:19:48.760 --> 0:19:50.879 you're going to opine on certain political issues. If you're 0:19:50.920 --> 0:19:53.000 private company, you don't have any of those pressures. Right, 0:19:53.480 --> 0:19:57.440 And in a time of great technological advances, you need 0:19:57.440 --> 0:19:59.160 to invest for things. I mean, some of the stuff 0:19:59.160 --> 0:20:01.720 we're doing in the block change space won't be material 0:20:01.800 --> 0:20:04.399 to the firm for seven to ten years, but we 0:20:04.400 --> 0:20:06.080 think is really important that we're doing it now. 0:20:06.200 --> 0:20:08.480 But if you're a private comp if you're a public company, 0:20:08.600 --> 0:20:10.680 shareholders are going to give you grief about that sort. 0:20:10.480 --> 0:20:14.919 Of if it's impacting your quarterly earnings. We're fortunate in 0:20:15.000 --> 0:20:18.159 that we still have founders and employees and management that 0:20:18.200 --> 0:20:20.840 have a significant amount of the stocks, so we can 0:20:20.880 --> 0:20:24.199 sort of withstand some of that pressure. But if your 0:20:24.200 --> 0:20:26.199 stock's under performing, you can always get an activist in 0:20:26.240 --> 0:20:29.200 who's looking short term to capture the benefit and say 0:20:29.240 --> 0:20:31.240 we'll be worth more if we break all this up. 0:20:31.440 --> 0:20:34.840 That doesn't build a long term sustainable company. But that's 0:20:34.880 --> 0:20:37.199 the type of pressure that public companies have, and so 0:20:37.720 --> 0:20:40.480 we believe that trend is here to stay, and we 0:20:40.560 --> 0:20:45.440 knew that we needed to add those capabilities. Soe I say, 0:20:45.440 --> 0:20:47.760 there's three areas that we look for an acquisition. So 0:20:47.840 --> 0:20:50.960 one is filling product gaps, particularly in the case of 0:20:51.080 --> 0:20:54.399