WEBVTT - Jenny Johnson on Managing a Trillion-Dollar Firm

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<v Speaker 1>This is Master's in Business with Barry rid Holds on

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<v Speaker 1>Bloomberg Radio. This week on the podcast, once again, I

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<v Speaker 1>have an extra extra special guest. Jenny Johnson is CEO

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<v Speaker 1>of investment giant Franklin Templeton. They run about a trillion

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<v Speaker 1>and a half dollars. She's been CEO since February twenty twenty.

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<v Speaker 1>She's been with the firm for decades. Just an incredible

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<v Speaker 1>insightful conversation about how to build a company, how to

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<v Speaker 1>grow through acquisitions, how to make sure everybody on your

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<v Speaker 1>team understands their role is appreciated and is acting and

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<v Speaker 1>performing at the highest levels. I found this conversation to

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<v Speaker 1>be absolutely not only insightful and informative, but also delightful,

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<v Speaker 1>and I think you will also with no further ado,

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<v Speaker 1>my conversation with Franklin Templeton's CEO, Jenny Johnsen. Jenny Johnson,

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<v Speaker 1>Welcome to Bloomberg.

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<v Speaker 2>Thank you, Berry. It's great to be here.

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<v Speaker 1>It's great to have you. I've been looking forward to

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<v Speaker 1>this for a long time. I've been back and forth

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<v Speaker 1>for a while, and then we had the pandemic hit.

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<v Speaker 1>Let's talk a little bit about your background. You joined

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<v Speaker 1>Franklin Templeton in nineteen eighty eight. Family members helped found

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<v Speaker 1>the farm have run it for a long time. And

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<v Speaker 1>back then it was frank was a Franklin temple it was.

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<v Speaker 2>And it just acquired Tubleed at nineteen ninety two. Right,

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<v Speaker 2>So I spent a year. My father said to me, look,

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<v Speaker 2>if you're going to be in the financial services business,

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<v Speaker 2>you should probably work in New York. And so I

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<v Speaker 2>spent a year working for Drexel Burnham.

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<v Speaker 1>And and by the way, that's tough when you're a

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<v Speaker 1>West co Coast gal. Used to sunshine and feather. Right,

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<v Speaker 1>Although I was.

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<v Speaker 2>Born in New Jersey, Okay, you know Jersey. I was

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<v Speaker 2>born in Montclair, Okay. So, and I lived in New

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<v Speaker 2>Jersey till I was about nine. So I came back

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<v Speaker 2>and lived in Jersey City.

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<v Speaker 1>And now I remember why we moved to California.

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<v Speaker 2>Hey, there's some beautiful parts in Jersey.

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<v Speaker 1>There are. It's the weather. It's really the big yes effort.

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<v Speaker 1>It's hard to beat that, you know, sunshine three hundred

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<v Speaker 1>days a year, to say the least. So, since we're

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<v Speaker 1>talking about weather. Aside from the weather, what are the

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<v Speaker 1>cultural differences like, especially in finance, because California finance very

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<v Speaker 1>different than New York finance culturally.

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<v Speaker 2>Sure, I mean I think so Franklin's headquartered in Silicon Valley.

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<v Speaker 2>I actually think that what influences it more than anything

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<v Speaker 2>now is the tech culture that's going on on the

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<v Speaker 2>West Coast. And you know, it's kind of funny if

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<v Speaker 2>you and now you see it in New York City.

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<v Speaker 2>But you know, if you showed up in a meeting

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<v Speaker 2>in a coat and tie, you know, post the dot

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<v Speaker 2>com era and kind of you know, coming into the

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<v Speaker 2>more recent stuff, you're viewed as sort of the old economy, right,

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<v Speaker 2>And you know, now we see everybody walk around New

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<v Speaker 2>York City, hardly anybody where's a tie. Uh, you know,

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<v Speaker 2>the vest is the.

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<v Speaker 3>New already the maybe post right, it's kind of moved

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<v Speaker 3>to Lululemon, Pansen and you know, button down shorts is

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<v Speaker 3>about as dressed up.

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<v Speaker 2>So I don't think anybody expected the West Coast to

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<v Speaker 2>lead the East Coast on uh, you know, culture and attire.

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<v Speaker 2>But I think that's happened a little bit on the

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<v Speaker 2>tech otherwise, you know it the West Coast. You know,

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<v Speaker 2>if you were in the financial services business, was rough

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<v Speaker 2>life you were you were in the office by a

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<v Speaker 2>lot of people get up at.

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<v Speaker 1>Nine am lunch. Yeah, right, I used to let But

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<v Speaker 1>the good news is you finish it one you could

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<v Speaker 1>go out surfing. Yeah, there you go, always saying, so

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<v Speaker 1>you're at Drexel for a year in New York, you

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<v Speaker 1>come back to Franklin Templeton. What was your first role

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<v Speaker 1>at ft O god or Franklin.

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<v Speaker 2>I was an executive administrative coordinator, right, So I was

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<v Speaker 2>working for the COO kind of on special projects, right.

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<v Speaker 2>And then I moved into we had a bank at

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<v Speaker 2>the time, and I moved into running part of the bank.

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<v Speaker 2>And I got to tell you we then spun out

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<v Speaker 2>an auto financing business, and as a CEO today, I

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<v Speaker 2>have to say that period of my career running the

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<v Speaker 2>auto finance business was probably the most significant. I also

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<v Speaker 2>ran our credit card business at the time.

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<v Speaker 1>Both both difficult businesses.

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<v Speaker 2>And learning how to do things as a CEO. One is,

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<v Speaker 2>we were securitizing the assets and the auto loan and

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<v Speaker 2>selling them off to other asset managers. We weren't able

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<v Speaker 2>to buy them ourselves. And I remember being on the

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<v Speaker 2>phone thinking, you know, as the as the pms were

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<v Speaker 2>asking questions about cash flows and things. So I was thinking,

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<v Speaker 2>you're asking all the wrong questions about whether this portfolio

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<v Speaker 2>will perform because it's things like down payment, you know,

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<v Speaker 2>there's there's you know, the credit score, average credit card,

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<v Speaker 2>what they risk exactly, And so it was really good

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<v Speaker 2>to kind of learn that side of the business. And then,

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<v Speaker 2>of course as a CEO, it doesn't matter the size

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<v Speaker 2>of the company. You're always talking about word allocate capital.

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<v Speaker 2>You know, should you add more to marketing or in

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<v Speaker 2>you know, collections, right, And those are the same problems

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<v Speaker 2>for big companies as little companies, And so I always

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<v Speaker 2>felt like it was great learning experience. And then the

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<v Speaker 2>biggest thing in the credit card business in the late

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<v Speaker 2>nineties or early nineties, those who were great at data

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<v Speaker 2>and data analytics, uh huh dominated the industry and essentially

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<v Speaker 2>put others out of it. And so I became a

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<v Speaker 2>big fan of data and how predictive it can be.

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<v Speaker 1>For all the obvious reasons. Right, if you have an

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<v Speaker 1>edge in data, you have an edge across the whole

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<v Speaker 1>business line for sure. So Franklin obviously divests out of

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<v Speaker 1>the banking business, the credit card business, the auto financing business.

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<v Speaker 1>What led to that decision did you guys just say

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<v Speaker 1>we really want to be pure investment management?

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<v Speaker 2>Well, wet. Part of it was, I think regulatory the

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<v Speaker 2>requirements for asset managers to have a bank were such

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<v Speaker 2>that it was would it would inhibit us a.

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<v Speaker 1>Bit post SNL crisis, Yeah, came up exactly.

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<v Speaker 2>Yeah, And honestly, I think we divested post financial crisis.

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<v Speaker 2>So once rules, yeah, So we kept it for a

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<v Speaker 2>long time. But once the rules search, it became difficult

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<v Speaker 2>around things like seeding new funds. You had to within

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<v Speaker 2>a year. You couldn't be more than ten percent of

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<v Speaker 2>the fund. Well, that's hard to do in our business

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<v Speaker 2>because people look for a track record, So your seed

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<v Speaker 2>and get a track record. And we just looked at

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<v Speaker 2>it and said, you know, it's not material enough to

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<v Speaker 2>have it cause the complications that it caused on our

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<v Speaker 2>asset management.

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<v Speaker 1>It sounds like it was an easy decision to cut

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<v Speaker 1>it loose.

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<v Speaker 2>Yeah, except that we do have fiduciary trust, which is

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<v Speaker 2>a high net worth business.

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<v Speaker 1>Huh.

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<v Speaker 2>And it's always nice to have a lending arm when

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<v Speaker 2>you have a high net worth business.

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<v Speaker 1>All right, So we're going to get into the acquisitions

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<v Speaker 1>a little later. But from when you first started as

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<v Speaker 1>an administrative organizational assistant. Whatever, right, right, fetch me some

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<v Speaker 1>coffee please, that sort of And although I would imagine

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<v Speaker 1>that you still you know, you warn't the bottom bottom

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<v Speaker 1>of the tone poll because people knew, obviously knew who

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<v Speaker 1>you were and who the family was. But from when

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<v Speaker 1>you first started at was a let me get my

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<v Speaker 1>feet wet sort of roll. How has Franklin changed over

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<v Speaker 1>the ensuing decades.

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<v Speaker 2>Well, I have to say, when you say you know,

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<v Speaker 2>you're right, you know, in a business where founders are

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<v Speaker 2>still involved in your family member, you're gonna be treated

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<v Speaker 2>a little differently. But my father always was adamant you

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<v Speaker 2>have to work harder than everybody else because people would

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<v Speaker 2>look at how hard you work and work just a

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<v Speaker 2>little less, like they won't feel like they have to

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<v Speaker 2>do more. And I remember my first job was a

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<v Speaker 2>summer job and I took over from my older sister

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<v Speaker 2>who was twenty one at the time, and I was,

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<v Speaker 2>I don't know, fifteen or sixteen, and he was paying

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<v Speaker 2>her five dollars an hour and he was paying me

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<v Speaker 2>two dollars and fifty cents an hour. And I said

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<v Speaker 2>to him, look, I think I'm I think I'm a

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<v Speaker 2>harder worker, and I think I should get five dollars

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<v Speaker 2>an hour, and he said, well, you can always get

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<v Speaker 2>a job somewhere else. So that's what I learned. Okay,

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<v Speaker 2>there's certain Dad.

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<v Speaker 1>Was no nonsense, noice serious here hit the bricks. That's

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<v Speaker 1>really interesting. But by the way, that's really astute observation.

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<v Speaker 1>People are gonna look at how hard you're gonna you're working,

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<v Speaker 1>and they think I could work a little less hard. See,

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<v Speaker 1>I would think they would want to work a little

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<v Speaker 1>harder than you, just so no one accuses them of slacking.

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<v Speaker 1>But maybe it's a generational thing. Who who knows, And

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<v Speaker 1>we're not that far. I think we're about the same age.

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<v Speaker 1>I was always taught, hey, find the hardest, fastest guy

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<v Speaker 1>out there and just do a little more than him.

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<v Speaker 1>So you don't want to be on the underside. You

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<v Speaker 1>are to be passing that. So h so, so well

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<v Speaker 1>you In the early days, it was mutual funds. It

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<v Speaker 1>was SMAs.

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<v Speaker 2>What what were you guys? Really just mutual funds? I

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<v Speaker 2>mean that's that was the That was the vehicle of choice.

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<v Speaker 2>And you know it evolved over time, uh, to things

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<v Speaker 2>like SMAs and ETFs and collective investment trust. Now now

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<v Speaker 2>you have to be able to provide all of those

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<v Speaker 2>vehicles as outlets for your investment capabilities. And I think

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<v Speaker 2>a lot of that change happened. It was starting to happen,

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<v Speaker 2>but accelerated after the Global Financial crisis, where regulators pushed

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<v Speaker 2>for more transparency in distribution fees, and so you saw

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<v Speaker 2>this shift from kind of fees embedded in say the

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<v Speaker 2>mutual fund vehicle, to being external on the client statement.

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<v Speaker 2>And so then advisors wanted things like ETFs and SMAs

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<v Speaker 2>and other things because a client was seeing that they

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<v Speaker 2>were paying their advisor every month, and so that's changed.

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<v Speaker 2>I think that's been a dramatic change in the industry

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<v Speaker 2>on the type of vehicle we use.

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<v Speaker 1>I always thought that the marketplace would fix that on

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<v Speaker 1>its own, and I've been wrong about this for decades.

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<v Speaker 1>I always assumed people would see, oh, five percent front

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<v Speaker 1>load on a C share or a two and a

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<v Speaker 1>half percent annual. I assume people would see that and

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<v Speaker 1>steer away. But it doesn't appear that that really happened

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<v Speaker 1>until the Financial crisis. That seems to be where indexing

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<v Speaker 1>really took off and where people became a lot more

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<v Speaker 1>price sensing well, I think.

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<v Speaker 2>You were seeing a big shift to C shares where

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<v Speaker 2>you know, you had a bigger back end trail and

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<v Speaker 2>a smaller upfront, So that was happening a bit. And

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<v Speaker 2>you know, look, I'm a big believer that some of

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<v Speaker 2>those type commission products are still important. We look in

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<v Speaker 2>the UK where they have something called RDR, so they

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<v Speaker 2>don't permit any kind of commission based selling, and so

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<v Speaker 2>it's all gone to fee based and you have a

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<v Speaker 2>huge percentage of population or orphan from advice because essentially

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<v Speaker 2>an advisor says, ah, that's too small, but an account it's

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<v Speaker 2>not worth my time, whereas if they got that upfront commission,

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<v Speaker 2>they'd spend the time doing it. And the key is

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<v Speaker 2>the difference for people investing early. So if you invest

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<v Speaker 2>for ten years from age twenty five to thirty five,

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<v Speaker 2>say five thousand dollars a year, or you wait till

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<v Speaker 2>thirty five and invest for thirty years at five thousand

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<v Speaker 2>dollars a year, you will have more money if you

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<v Speaker 2>start for those investments over those ten year period because

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<v Speaker 2>of the compounding. And so getting people to invest early

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<v Speaker 2>is really really important, and you don't want to have

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<v Speaker 2>mechanisms regulatory environments that kind of prohibit them getting advice early.

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<v Speaker 1>Huh. That's interesting. Although in today's digital world, as you

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<v Speaker 1>guys know, there's so many ways to invest with no

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<v Speaker 1>minimum fees, and a lot of people, especially of the

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<v Speaker 1>younger generation, are very comfortable as di wires not do

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<v Speaker 1>it yourselfers. Not that robinhood is how they should be

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<v Speaker 1>necessarily investing, but hey, it gets some interest in finance.

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<v Speaker 1>It gets them thinking about money. That's not a terrible thing.

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<v Speaker 2>No, it's not terrible. It's actually great, and especially because

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<v Speaker 2>you can do some basic kind of asset allocation models

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<v Speaker 2>or the robo advisor can be terrific for somebody who

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<v Speaker 2>doesn't have a complicated financial situation. What you tend to

0:11:59.200 --> 0:12:03.080
<v Speaker 2>see is people earn more and have more and more savings.

0:12:03.480 --> 0:12:05.800
<v Speaker 2>Somebody said to me anecdotally, if you have you know,

0:12:05.880 --> 0:12:08.480
<v Speaker 2>sort of three years worth of savings if your income,

0:12:08.760 --> 0:12:11.400
<v Speaker 2>that's when you start to look for advice because you realize,

0:12:11.679 --> 0:12:14.200
<v Speaker 2>you know what, this is more complicated. I'd rather have

0:12:14.240 --> 0:12:17.560
<v Speaker 2>somebody who's full time focused on this than me as

0:12:17.600 --> 0:12:19.160
<v Speaker 2>a part time person managing my money.

0:12:19.360 --> 0:12:21.160
<v Speaker 1>I just have to share a funny story. We just

0:12:21.200 --> 0:12:25.240
<v Speaker 1>got back from vacation, not like terribly long, but eight

0:12:25.320 --> 0:12:27.720
<v Speaker 1>or nine days, and you come back to all this

0:12:27.880 --> 0:12:33.120
<v Speaker 1>mail and it's, oh, here's the irs state the pass through.

0:12:33.160 --> 0:12:35.360
<v Speaker 1>I got to forward that to the accountant. Oh, and

0:12:35.440 --> 0:12:38.480
<v Speaker 1>here's a disclosure about this fun we have. And then

0:12:38.559 --> 0:12:41.360
<v Speaker 1>here's the quarterly thing coming up. And all of a sudden,

0:12:41.720 --> 0:12:44.640
<v Speaker 1>like in a rush, I figured out, Oh, this is

0:12:44.640 --> 0:12:47.840
<v Speaker 1>why people pay a fee for someone to give them advice.

0:12:48.240 --> 0:12:50.280
<v Speaker 1>I don't want to deal with. I'm like relaxed, I'm

0:12:50.320 --> 0:12:52.760
<v Speaker 1>back from vacation. The last thing I want to do

0:12:52.800 --> 0:12:56.439
<v Speaker 1>is start thinking about New York State, pe Tech passed through.

0:12:56.960 --> 0:12:59.760
<v Speaker 1>Just take this off. What is it going to cost? Great?

0:13:00.120 --> 0:13:01.600
<v Speaker 1>Get this off my plate. I don't want to deal

0:13:01.600 --> 0:13:01.760
<v Speaker 1>with that.

0:13:01.960 --> 0:13:03.600
<v Speaker 2>Well, and I think a lot of people when like

0:13:03.679 --> 0:13:06.040
<v Speaker 2>TurboTax came out, they said, oh, it's gonna be the

0:13:06.120 --> 0:13:08.760
<v Speaker 2>end of the CPA. Who are the number one users

0:13:08.800 --> 0:13:12.160
<v Speaker 2>of turbotaxes? Because in the end, people sit there and say,

0:13:12.160 --> 0:13:15.240
<v Speaker 2>wait a second, Actually, the more money people have, the

0:13:15.240 --> 0:13:17.600
<v Speaker 2>more they have options to do other things, and they

0:13:17.600 --> 0:13:20.559
<v Speaker 2>think the opportunity cost of spending their time trying to

0:13:20.600 --> 0:13:22.240
<v Speaker 2>manage those things is not worth it.

0:13:22.240 --> 0:13:25.760
<v Speaker 1>It's the time it's it's the time is crucial. Plus

0:13:26.120 --> 0:13:28.480
<v Speaker 1>the rules change every year. He wants to have to

0:13:28.520 --> 0:13:31.440
<v Speaker 1>stay current with that. I find it's just like, you

0:13:31.480 --> 0:13:34.320
<v Speaker 1>know what, and it's funny. This is like a later

0:13:34.400 --> 0:13:37.000
<v Speaker 1>in life realization when you're young and have all the

0:13:37.040 --> 0:13:38.760
<v Speaker 1>time in the world and not a lot of money,

0:13:39.040 --> 0:13:41.360
<v Speaker 1>I could figure this out. I do my own taxes.

0:13:41.400 --> 0:13:44.120
<v Speaker 1>And then when you're old, it's like, whatever it costs,

0:13:44.320 --> 0:13:46.840
<v Speaker 1>just do it. Get this, get this junk away from me.

0:13:47.320 --> 0:13:50.199
<v Speaker 1>So so let's talk a little bit about the history

0:13:50.200 --> 0:13:55.839
<v Speaker 1>of acquisitions at Franklin Templeton. Just about thirty years ago

0:13:56.080 --> 0:14:01.599
<v Speaker 1>Franklin acquired Templeton, Galbrith and Hansburger. That new name of

0:14:01.640 --> 0:14:05.560
<v Speaker 1>the company became Franklin Templeton. So it was Franklin along

0:14:05.559 --> 0:14:09.840
<v Speaker 1>with mutual fund pioneer Sir John Templeton. You were kind

0:14:09.840 --> 0:14:11.480
<v Speaker 1>of young in the farm in ninety two when this

0:14:11.520 --> 0:14:15.479
<v Speaker 1>took place. What do you recall from that fairly substantial

0:14:15.480 --> 0:14:17.679
<v Speaker 1>back then, a billion dollar acquisition was not nothing.

0:14:17.800 --> 0:14:20.720
<v Speaker 2>Yeah, No, it was huge, and uh it was interesting

0:14:20.720 --> 0:14:23.400
<v Speaker 2>because a lot of people, uh we we sort of

0:14:23.440 --> 0:14:26.680
<v Speaker 2>came into that late as far as one of the

0:14:26.720 --> 0:14:32.960
<v Speaker 2>potential acquirers. So you know, we basically viewed it as

0:14:33.400 --> 0:14:37.640
<v Speaker 2>Franklin had was very strong and fixed income, domestic equity,

0:14:38.000 --> 0:14:41.120
<v Speaker 2>and what Templeton did was open up this international investing,

0:14:41.160 --> 0:14:44.080
<v Speaker 2>which was really pretty new for most. So yeah, they

0:14:44.080 --> 0:14:46.520
<v Speaker 2>were they were you know, you you there were pioneers

0:14:46.520 --> 0:14:49.800
<v Speaker 2>in emerging markets and and uh and really kind of

0:14:49.800 --> 0:14:53.200
<v Speaker 2>global equity. And when we acquired it, a lot of

0:14:53.200 --> 0:14:56.840
<v Speaker 2>people were skeptical because asset management acquisitions don't always work,

0:14:57.760 --> 0:15:01.120
<v Speaker 2>and expected a big cultural difference, and and it was expensive.

0:15:01.120 --> 0:15:04.040
<v Speaker 2>And I have to say that my dad understood and

0:15:04.080 --> 0:15:06.760
<v Speaker 2>we It's been our philosophy, you know, throughout all our

0:15:06.800 --> 0:15:09.720
<v Speaker 2>acquisitions in the asset management business. What are you buying.

0:15:09.760 --> 0:15:14.160
<v Speaker 2>You're buying people their investment capability and their investment process.

0:15:14.440 --> 0:15:17.160
<v Speaker 2>So don't destroy value by going in and messing with it.

0:15:17.240 --> 0:15:20.960
<v Speaker 2>So we really left it stand alone on the investment

0:15:21.000 --> 0:15:24.000
<v Speaker 2>side and then integrated the rest of the firm, and

0:15:24.080 --> 0:15:25.600
<v Speaker 2>that worked out really well.

0:15:25.800 --> 0:15:29.920
<v Speaker 1>That's so different of an approach than we typically hear,

0:15:30.520 --> 0:15:33.840
<v Speaker 1>which is, we want to buy a company for the assets,

0:15:33.960 --> 0:15:37.680
<v Speaker 1>the revenue stream, maybe some technology or intellectual property, and

0:15:37.720 --> 0:15:39.840
<v Speaker 1>we're going to just mash you into our culture, whether

0:15:39.840 --> 0:15:42.840
<v Speaker 1>you like it or not. That seems like a little

0:15:42.920 --> 0:15:46.840
<v Speaker 1>more nuanced approach that your dad took. I don't see

0:15:46.880 --> 0:15:50.520
<v Speaker 1>a lot of other mergers in the finance space that

0:15:50.720 --> 0:15:55.880
<v Speaker 1>are that hands off. Maybe the big acquisition of Pimco

0:15:56.560 --> 0:16:00.600
<v Speaker 1>twenty years ago was maybe a little too much hands off,

0:16:00.680 --> 0:16:03.240
<v Speaker 1>But for the most part, it seems like everybody just

0:16:03.320 --> 0:16:04.520
<v Speaker 1>mashes everybody together.

0:16:04.640 --> 0:16:07.240
<v Speaker 2>Yeah, I mean, I you know, in our case, I

0:16:07.240 --> 0:16:09.800
<v Speaker 2>wouldn't say it's totally hands off. It's hands off on

0:16:09.800 --> 0:16:14.160
<v Speaker 2>the investment process, uh huh, right, and really trying to

0:16:14.160 --> 0:16:16.960
<v Speaker 2>integate and integrate the rest of it, and then trying

0:16:17.000 --> 0:16:20.200
<v Speaker 2>to figure out ways that you can add value because

0:16:20.240 --> 0:16:22.880
<v Speaker 2>you have scale so that these firms you know, don't have.

0:16:22.960 --> 0:16:25.360
<v Speaker 2>That was less of an issue in the Templeton deal,

0:16:25.400 --> 0:16:28.200
<v Speaker 2>but with our more recent acquisitions that's been really important.

0:16:28.240 --> 0:16:31.480
<v Speaker 2>What can we do because we're bigger, that can enhance

0:16:31.600 --> 0:16:32.880
<v Speaker 2>the various investment teams.

0:16:32.960 --> 0:16:35.920
<v Speaker 1>So let's talk about some of those more recent acquisitions.

0:16:35.960 --> 0:16:39.480
<v Speaker 1>Twenty twenty, you buy leg Mason. I think it was

0:16:39.520 --> 0:16:42.160
<v Speaker 1>an old cash deal four and a half billion dollars

0:16:42.200 --> 0:16:42.880
<v Speaker 1>is that abount? Right?

0:16:43.080 --> 0:16:44.120
<v Speaker 2>And then we took on some debt.

0:16:44.240 --> 0:16:48.360
<v Speaker 1>Yeah, what was the thinking that what did Leg Mason

0:16:48.400 --> 0:16:50.440
<v Speaker 1>bring that you guys needed or didn't have.

0:16:50.640 --> 0:16:54.280
<v Speaker 2>Yeah. So in the case of LEG, they had Western

0:16:54.320 --> 0:16:57.800
<v Speaker 2>Asset Management, which is you know, core corplus fixed income,

0:16:57.840 --> 0:17:01.160
<v Speaker 2>which is the largest category. We just didn't have scale there,

0:17:01.160 --> 0:17:02.800
<v Speaker 2>and you have to have scale to be in the

0:17:02.800 --> 0:17:06.240
<v Speaker 2>institutional space. And the other big one that was exciting

0:17:06.240 --> 0:17:08.400
<v Speaker 2>for us was Clarion Partners, which now is an eighty

0:17:08.440 --> 0:17:10.360
<v Speaker 2>two billion dollar I think they were probably forty five

0:17:10.359 --> 0:17:13.960
<v Speaker 2>at the time, forty five billion real estate manager. And

0:17:14.240 --> 0:17:17.080
<v Speaker 2>we knew that we wanted to get into alternative space

0:17:17.720 --> 0:17:20.280
<v Speaker 2>and so getting that as part of the LEG deal

0:17:21.160 --> 0:17:24.560
<v Speaker 2>was really exciting. And then you know unbelievable managers and

0:17:24.680 --> 0:17:29.080
<v Speaker 2>Clearbridge and Martin Curry and brandy Wine, and so we

0:17:29.240 --> 0:17:33.760
<v Speaker 2>just got great expertise there. They were seventy five percent institutional,

0:17:33.840 --> 0:17:37.480
<v Speaker 2>we were seventy five percent retail. So bringing the two

0:17:37.480 --> 0:17:40.879
<v Speaker 2>firms together, you really made us fifty to fifty retail

0:17:40.880 --> 0:17:42.720
<v Speaker 2>and institutional, and that's been very important.

0:17:42.880 --> 0:17:46.800
<v Speaker 1>Huh. And then this year you acquire Putinham for almost

0:17:46.880 --> 0:17:51.560
<v Speaker 1>a billion dollars. Puttenham almost the purchaser of Templeton, which

0:17:51.600 --> 0:17:54.359
<v Speaker 1>is kind of kind of amusing that everybody ended up

0:17:54.400 --> 0:17:57.440
<v Speaker 1>in the same place. That seems to be a very

0:17:57.480 --> 0:18:01.840
<v Speaker 1>strategic purchase. Tell us the thing thinking behind acquiring Putnam.

0:18:01.920 --> 0:18:04.399
<v Speaker 2>So let me step back and just say, serve of

0:18:04.400 --> 0:18:06.679
<v Speaker 2>what our strategy is in acquisition. So we've done I

0:18:06.680 --> 0:18:08.680
<v Speaker 2>think ten in the last Putnam will be R tenth

0:18:08.680 --> 0:18:11.639
<v Speaker 2>in the last three years, and they've all been focused on.

0:18:11.680 --> 0:18:14.080
<v Speaker 2>If you think about the big macro trends going on

0:18:14.119 --> 0:18:17.560
<v Speaker 2>in the industry, one is private markets are here to stay,

0:18:18.000 --> 0:18:22.040
<v Speaker 2>and they're here to stay. One take private credit. Right

0:18:22.160 --> 0:18:26.399
<v Speaker 2>the banking crisis of the Global financial crisis, had regulators

0:18:26.480 --> 0:18:30.280
<v Speaker 2>changed capital requirements for banks. Banks preserve their capital for

0:18:30.320 --> 0:18:35.040
<v Speaker 2>their best clients, and it created this opportunity for you know,

0:18:35.200 --> 0:18:38.480
<v Speaker 2>basically private credit outside the banking system. And honestly, with

0:18:38.640 --> 0:18:42.200
<v Speaker 2>the discussion around which I have strong opinions on discussion

0:18:42.240 --> 0:18:46.560
<v Speaker 2>around more capital requirements post the regional banking crisis, I

0:18:46.560 --> 0:18:48.720
<v Speaker 2>think that's only gonna get worse and then you'll.

0:18:48.640 --> 0:18:51.000
<v Speaker 1>Well, that's going to create opportunities for firms that are

0:18:51.080 --> 0:18:54.280
<v Speaker 1>filling that void exactly. And by the way, this really

0:18:54.320 --> 0:18:57.399
<v Speaker 1>began in the late nineties early two thousands as the

0:18:57.440 --> 0:19:01.159
<v Speaker 1>big banks moved upscale. They like to void underneath and

0:19:01.480 --> 0:19:02.840
<v Speaker 1>private markets stepped right in.

0:19:02.920 --> 0:19:05.000
<v Speaker 2>That's exactly right. And then the other piece of that,

0:19:05.119 --> 0:19:08.000
<v Speaker 2>and you know this was definitely fueled by low interest rates,

0:19:08.000 --> 0:19:12.560
<v Speaker 2>but private equity. The fact is companies can stay private longer.

0:19:12.720 --> 0:19:15.119
<v Speaker 2>And you see that in the numbers. Right, two thousand,

0:19:15.200 --> 0:19:17.800
<v Speaker 2>average company went public after three years. That was probably

0:19:17.800 --> 0:19:20.640
<v Speaker 2>an anomaly in the dot com right. By twenty nineteen

0:19:20.920 --> 0:19:23.359
<v Speaker 2>it was I think nine to ten years, and by

0:19:23.400 --> 0:19:26.280
<v Speaker 2>twenty twenty two was fourteen to fifteen years before they

0:19:26.320 --> 0:19:28.480
<v Speaker 2>were going public. Right, you have half the number of

0:19:28.520 --> 0:19:31.240
<v Speaker 2>public companies that you had in two thousand and so

0:19:31.720 --> 0:19:35.239
<v Speaker 2>you look at it, well, why go public? Right? A

0:19:35.240 --> 0:19:40.359
<v Speaker 2>public company has quarterly earning pressure. You know, there's a

0:19:40.400 --> 0:19:45.520
<v Speaker 2>lot of scrutiny around compensation of the staff, there's a

0:19:45.560 --> 0:19:48.719
<v Speaker 2>lot of uh, there's an expectation on political you know,

0:19:48.760 --> 0:19:50.879
<v Speaker 2>you're going to opine on certain political issues. If you're

0:19:50.920 --> 0:19:53.040
<v Speaker 2>private company, you don't have any of those pressures. Right,

0:19:53.480 --> 0:19:57.440
<v Speaker 2>And in a time of great technological advances, you need

0:19:57.480 --> 0:19:59.160
<v Speaker 2>to invest for things. I mean, some of the stuff

0:19:59.200 --> 0:20:01.720
<v Speaker 2>we're doing in the block change space won't be material

0:20:01.800 --> 0:20:04.399
<v Speaker 2>to the firm for seven to ten years. But we

0:20:04.440 --> 0:20:06.120
<v Speaker 2>think it's really important that we're doing it now.

0:20:06.200 --> 0:20:08.480
<v Speaker 1>But if you're a private comp if your public company

0:20:08.600 --> 0:20:10.480
<v Speaker 1>shareholders are going to give you grief about that sort

0:20:10.480 --> 0:20:10.960
<v Speaker 1>of adi.

0:20:10.960 --> 0:20:15.119
<v Speaker 2>If it's impacting your quarterly earnings. We're fortunate in that

0:20:15.440 --> 0:20:18.320
<v Speaker 2>we still have founders and employees and management that have

0:20:18.960 --> 0:20:21.080
<v Speaker 2>a significant amount of the stocks, so we can sort

0:20:21.119 --> 0:20:24.520
<v Speaker 2>of withstand some of that pressure. But if your stock's

0:20:24.560 --> 0:20:26.520
<v Speaker 2>under performing, you can always get an activist in who's

0:20:26.520 --> 0:20:29.720
<v Speaker 2>looking short term to capture the benefit and say we'll

0:20:29.760 --> 0:20:31.560
<v Speaker 2>be worth more if we break all this up. That

0:20:31.600 --> 0:20:34.960
<v Speaker 2>doesn't build a long term sustainable company. But that's the

0:20:35.040 --> 0:20:37.800
<v Speaker 2>type of pressure that public companies have, and so we

0:20:38.480 --> 0:20:40.840
<v Speaker 2>believe that trend is here to stay, and we knew

0:20:40.880 --> 0:20:45.440
<v Speaker 2>that we needed to add those capabilities. Soe I say,

0:20:45.480 --> 0:20:47.800
<v Speaker 2>there's three areas that we look for an acquisition. So

0:20:47.880 --> 0:20:50.960
<v Speaker 2>one is filling product gaps, particularly in the case of

0:20:51.080 --> 0:20:54.399
<v Speaker 2>private markets. The second is the second big trend was

0:20:54.440 --> 0:20:58.480
<v Speaker 2>when the financial crisis happened and you had we mentioned,

0:20:58.480 --> 0:21:02.720
<v Speaker 2>you know, the regulators made put pressure onto have transparency

0:21:02.800 --> 0:21:06.840
<v Speaker 2>around distribution fees and advisors became fee based that honestly

0:21:06.880 --> 0:21:11.320
<v Speaker 2>pushed much of the power to the distributor and honestly

0:21:11.560 --> 0:21:14.040
<v Speaker 2>actually to the person who deals directly with a client,

0:21:14.320 --> 0:21:18.480
<v Speaker 2>to the financial advisor themselves and so, and the manufacturer

0:21:18.480 --> 0:21:21.359
<v Speaker 2>had less power, and so we look for ways that

0:21:21.400 --> 0:21:24.560
<v Speaker 2>we can build greater strength in distribution as being a

0:21:24.560 --> 0:21:27.920
<v Speaker 2>better strategic partner. Some of that's fintech. In the case

0:21:27.960 --> 0:21:31.119
<v Speaker 2>of the Putnam, it's building a closer relationship with POWERCREP,

0:21:31.160 --> 0:21:34.640
<v Speaker 2>who has you know, who owns both Great West Life

0:21:34.640 --> 0:21:38.960
<v Speaker 2>Insurance or significant control of it, as well as Empower

0:21:39.119 --> 0:21:45.000
<v Speaker 2>the second fast the second largest retirement platform, fastest growing one.

0:21:45.200 --> 0:21:48.240
<v Speaker 2>And that's really important because the retirement channel is where

0:21:48.320 --> 0:21:50.800
<v Speaker 2>mutual funds still have growth, right.

0:21:50.760 --> 0:21:53.359
<v Speaker 1>Because there's no reason to put an ETF there Exactly

0:21:53.520 --> 0:21:56.879
<v Speaker 1>the negative on a mutual funders phantom taxes. Hey, if

0:21:56.880 --> 0:22:00.359
<v Speaker 1>it's a qualified account, it doesn't matter, it's irrelevant. And

0:22:00.400 --> 0:22:04.160
<v Speaker 1>there are advantages to mutual funds in terms of trading

0:22:04.480 --> 0:22:08.359
<v Speaker 1>and management that give it a leg up over over ETFs,

0:22:08.520 --> 0:22:11.920
<v Speaker 1>especially in that sort of environment. Absolutely, so I want

0:22:11.920 --> 0:22:14.359
<v Speaker 1>to talk about the forty percent and a little bit

0:22:14.359 --> 0:22:17.320
<v Speaker 1>of insulation from public markets, but I'm going to circle

0:22:17.359 --> 0:22:18.920
<v Speaker 1>back to that. I got to ask you about one

0:22:19.000 --> 0:22:25.160
<v Speaker 1>last acquisition last year. You purchased O'Shaughnessey Investments, including their

0:22:25.240 --> 0:22:31.000
<v Speaker 1>direct indexing product called Canvas Full Disclosure, where one of

0:22:31.040 --> 0:22:34.400
<v Speaker 1>the early users of Canvas. I think my firm Results

0:22:34.400 --> 0:22:36.640
<v Speaker 1>Wealth Management is the largest or at least was when

0:22:36.640 --> 0:22:40.800
<v Speaker 1>you acquired it, the largest client of Canvas. We love

0:22:40.880 --> 0:22:42.879
<v Speaker 1>the product and our clients have found it to be

0:22:43.800 --> 0:22:49.679
<v Speaker 1>tremendously useful in terms of managing and offsetting capital gain taxes.

0:22:50.320 --> 0:22:53.800
<v Speaker 1>What was the thinking behind the O'Shaughnessy acquisition and what

0:22:53.800 --> 0:22:55.040
<v Speaker 1>are the plans for Canvas?

0:22:55.119 --> 0:22:58.520
<v Speaker 2>Oh fantastic. I mean you probably could having being a

0:22:58.600 --> 0:23:00.280
<v Speaker 2>user of it, you probably could even speak to this

0:23:00.400 --> 0:23:02.480
<v Speaker 2>more than I can, But I can tell you we

0:23:02.560 --> 0:23:05.000
<v Speaker 2>think again, a big trend is this direct indexing. But

0:23:05.119 --> 0:23:08.199
<v Speaker 2>the reason we love Canvas, and I know you know

0:23:08.280 --> 0:23:13.199
<v Speaker 2>this is Canvas grew out of a quant shop that

0:23:13.400 --> 0:23:17.800
<v Speaker 2>built the technology to manage their quant portfolio. And so

0:23:18.320 --> 0:23:21.880
<v Speaker 2>when initially you just have direct indexing with tax optimization,

0:23:22.320 --> 0:23:24.399
<v Speaker 2>but we look at it as a tool where we

0:23:24.480 --> 0:23:27.480
<v Speaker 2>think you can take just like the trend towards SMA

0:23:27.640 --> 0:23:31.200
<v Speaker 2>separately managed accounts, you can use the technology of Canvas

0:23:31.480 --> 0:23:35.440
<v Speaker 2>express our active management strategies in there. So take a

0:23:35.520 --> 0:23:40.480
<v Speaker 2>mutual fund strategy, deliver it through the Canvas platform overlay

0:23:40.520 --> 0:23:44.359
<v Speaker 2>with tax optimization, and even include some ESG overlay. So

0:23:44.400 --> 0:23:46.639
<v Speaker 2>if you have a client who says, you know, I

0:23:46.680 --> 0:23:49.359
<v Speaker 2>really want to you know, my daughter will say, I

0:23:49.440 --> 0:23:52.800
<v Speaker 2>really want things that are pushing towards net neutral, on

0:23:53.240 --> 0:23:56.160
<v Speaker 2>net zero and carbon, so she wants her portfolio manager.

0:23:56.200 --> 0:23:58.879
<v Speaker 2>That way, you can put those tags in there but

0:23:59.000 --> 0:24:03.359
<v Speaker 2>still take a professionally managed strategy and express it through

0:24:03.359 --> 0:24:05.600
<v Speaker 2>that technology. So we looked at that and said, this

0:24:05.680 --> 0:24:08.600
<v Speaker 2>is going to be really significant in the future. We

0:24:08.720 --> 0:24:11.600
<v Speaker 2>have to be in the direct index space, but more importantly,

0:24:11.640 --> 0:24:13.760
<v Speaker 2>we have to have great technology because we think this

0:24:13.880 --> 0:24:15.639
<v Speaker 2>is just the beginning of a trend.

0:24:15.960 --> 0:24:16.120
<v Speaker 3>Right.

0:24:16.200 --> 0:24:19.120
<v Speaker 1>Not only is the software really good, but the O'Shaughnessy

0:24:19.200 --> 0:24:23.960
<v Speaker 1>database so that they've been polishing up for decades. Very

0:24:24.000 --> 0:24:26.919
<v Speaker 1>few things, I mean, Crisper is probably the only other

0:24:26.960 --> 0:24:30.560
<v Speaker 1>one that is that focus, that dedicated, that clean. Most

0:24:30.640 --> 0:24:33.879
<v Speaker 1>databases are just problematic to do the solo work. And

0:24:34.640 --> 0:24:37.480
<v Speaker 1>Jim is now retired, but and a son, Patrick took over.

0:24:38.359 --> 0:24:40.920
<v Speaker 1>But it's a great product. They're a great team. I'm

0:24:40.920 --> 0:24:43.359
<v Speaker 1>sure you guys are gonna have a lot of success

0:24:43.440 --> 0:24:46.480
<v Speaker 1>with them. Let me go over a couple of more

0:24:48.119 --> 0:24:53.040
<v Speaker 1>acquisitions that really kind of surprise me. Managed options capabilities

0:24:53.080 --> 0:24:54.399
<v Speaker 1>tell us, tell us about that.

0:24:54.600 --> 0:24:57.520
<v Speaker 2>Well, we think that's going to be important to add

0:24:57.600 --> 0:25:01.399
<v Speaker 2>to the Canvas platform. Oh really so yeah, so managed

0:25:01.440 --> 0:25:06.280
<v Speaker 2>options are important part as part of the tax optimization strategy. Uh.

0:25:06.359 --> 0:25:09.879
<v Speaker 2>And so the feeling is that you needed that to

0:25:10.040 --> 0:25:13.280
<v Speaker 2>be included to where this where the technology will ultimately

0:25:13.320 --> 0:25:17.000
<v Speaker 2>go for this where the uh the strategies ultimately.

0:25:17.119 --> 0:25:21.879
<v Speaker 1>So when I hear managed options and capital gains, I

0:25:21.920 --> 0:25:24.680
<v Speaker 1>think zero cost collars and things like that, is that

0:25:24.720 --> 0:25:25.560
<v Speaker 1>what's along the lines?

0:25:25.880 --> 0:25:28.520
<v Speaker 2>Yeah, so they can include that now in in like

0:25:28.520 --> 0:25:29.800
<v Speaker 2>a separately managed account.

0:25:29.840 --> 0:25:34.440
<v Speaker 1>Oh that's really really interesting. And then Alcentra you acquired

0:25:34.440 --> 0:25:39.920
<v Speaker 1>from bny Mellon Lexington Partners, who was another private equity

0:25:39.960 --> 0:25:43.880
<v Speaker 1>and secondary entity. And then I didn't realize you guys

0:25:43.920 --> 0:25:48.560
<v Speaker 1>bought Advisor Engine that was like a big sort of

0:25:48.600 --> 0:25:53.280
<v Speaker 1>semi robo advisor, uh for for advisors. I mean this

0:25:53.320 --> 0:25:56.520
<v Speaker 1>is a long line. And then Alternative Credit Manager, Benefit

0:25:56.560 --> 0:26:00.400
<v Speaker 1>Street Partners, and then Athenia Capital. I mean, you guys

0:26:00.440 --> 0:26:03.400
<v Speaker 1>have been on a tear. All of these things are

0:26:03.960 --> 0:26:07.760
<v Speaker 1>different products filling in holes. Different services, and you want

0:26:07.760 --> 0:26:09.800
<v Speaker 1>to be able to offer a full rounded set of

0:26:09.800 --> 0:26:12.320
<v Speaker 1>products to institutional and retail clients.

0:26:12.520 --> 0:26:15.400
<v Speaker 2>We want to be the first phone call. We want

0:26:15.400 --> 0:26:18.080
<v Speaker 2>to be the strategic partner where you know, somebody's thinking,

0:26:18.119 --> 0:26:20.760
<v Speaker 2>I've got this problem, let me think about how to

0:26:20.800 --> 0:26:23.080
<v Speaker 2>solve it. I want to talk to Franklin Templeton and

0:26:23.119 --> 0:26:24.840
<v Speaker 2>talk to them about how to approach it. And so

0:26:25.240 --> 0:26:29.720
<v Speaker 2>you take Advisor Engine. It has a CRM system that

0:26:29.960 --> 0:26:33.879
<v Speaker 2>was built by a financial advisor. So you know, a

0:26:33.920 --> 0:26:38.920
<v Speaker 2>lot of you know, a lot of smaller rias don't

0:26:39.000 --> 0:26:40.879
<v Speaker 2>have a tech team to sit there and say how

0:26:40.920 --> 0:26:44.160
<v Speaker 2>do I use Salesforce? How do I use Microsoft Dynamic?

0:26:44.600 --> 0:26:46.680
<v Speaker 2>And so they want something simple. So this is a

0:26:46.720 --> 0:26:49.879
<v Speaker 2>simple CRM system that's just for the business of being

0:26:49.880 --> 0:26:52.880
<v Speaker 2>a financial advisor. And if we can build that relationship

0:26:52.880 --> 0:26:56.280
<v Speaker 2>with that advisor, then we feel like we can be

0:26:56.520 --> 0:26:57.640
<v Speaker 2>a stickier partner.

0:26:58.119 --> 0:27:02.440
<v Speaker 1>How important is the registered investment advisor the ri A

0:27:02.560 --> 0:27:05.600
<v Speaker 1>space to Franklin Templeton, I always thought of you guys

0:27:05.720 --> 0:27:10.880
<v Speaker 1>back in the day as mutual fund managers, perhaps selling

0:27:11.119 --> 0:27:15.679
<v Speaker 1>into that vertical I sound like a marketing guy, But

0:27:16.560 --> 0:27:20.000
<v Speaker 1>how important is the ri A space to Franklin Templeton.

0:27:19.600 --> 0:27:22.800
<v Speaker 2>Today, well, the ra as have been growing again as

0:27:22.840 --> 0:27:25.800
<v Speaker 2>the fee based environment and the fact that people honestly

0:27:25.840 --> 0:27:28.320
<v Speaker 2>can take their book and walk in and set up

0:27:28.320 --> 0:27:31.359
<v Speaker 2>their own shingle and be on a platform provider, and

0:27:31.440 --> 0:27:33.920
<v Speaker 2>so it's a really important channel for us. It's it's

0:27:34.000 --> 0:27:38.639
<v Speaker 2>a we are much bigger in the wirehouse and the

0:27:39.359 --> 0:27:41.520
<v Speaker 2>UH in the independent channels because that's kind of been

0:27:41.520 --> 0:27:45.239
<v Speaker 2>our DNA historically. UH and and those who who were

0:27:45.240 --> 0:27:48.280
<v Speaker 2>big in the ETF tended ra as have tended to

0:27:48.359 --> 0:27:51.280
<v Speaker 2>lean more towards ETFs, although that's a little bit of

0:27:51.280 --> 0:27:55.879
<v Speaker 2>a stereotype, and so it's been an important area of

0:27:55.960 --> 0:27:57.959
<v Speaker 2>focus for us to grow that channel.

0:27:58.520 --> 0:28:01.840
<v Speaker 1>And to be fair, the wirehouses have kind of been

0:28:01.920 --> 0:28:06.240
<v Speaker 1>slowly morphing into advisors. They're all hybrids these days. It's

0:28:06.320 --> 0:28:10.200
<v Speaker 1>less transactional, more fee based to the benefit of the clients.

0:28:10.320 --> 0:28:11.560
<v Speaker 2>Absolutely couldn't agree more.

0:28:11.680 --> 0:28:15.160
<v Speaker 1>UH really really quite fascinating. Let's talk a little bit

0:28:15.359 --> 0:28:20.320
<v Speaker 1>about your experience as a woman running a corporation. You've

0:28:20.320 --> 0:28:24.520
<v Speaker 1>held leadership roles across just about every line of business

0:28:24.560 --> 0:28:27.600
<v Speaker 1>in the company. What was that experience like, what did

0:28:27.640 --> 0:28:31.800
<v Speaker 1>you learn from running things as diverse as investment management

0:28:32.240 --> 0:28:35.640
<v Speaker 1>and technology. It seems like totally opposite business.

0:28:35.640 --> 0:28:38.160
<v Speaker 2>It's funny. So you know, on the first question people

0:28:38.200 --> 0:28:40.080
<v Speaker 2>ask me, what's it like to be a woman in finance. Well,

0:28:40.400 --> 0:28:41.840
<v Speaker 2>the problem is I don't know what it's like not

0:28:41.960 --> 0:28:43.959
<v Speaker 2>to be one, So I don't know that I have

0:28:44.440 --> 0:28:46.880
<v Speaker 2>a good answer to that, but I can say I

0:28:46.920 --> 0:28:50.040
<v Speaker 2>am so thankful today as a CEO to have having

0:28:50.240 --> 0:28:56.440
<v Speaker 2>run technology because so much I think of decisions that

0:28:56.440 --> 0:28:59.240
<v Speaker 2>we have to make in innovation that's happening requires a

0:28:59.280 --> 0:29:04.000
<v Speaker 2>basic understand technology. And so I look at, you know,

0:29:04.080 --> 0:29:07.680
<v Speaker 2>parts of your career you've sort of moved your way around,

0:29:07.760 --> 0:29:09.920
<v Speaker 2>and you wonder whether it's going to be relevant at

0:29:09.960 --> 0:29:12.760
<v Speaker 2>some point or not. And some of the things that

0:29:12.840 --> 0:29:17.120
<v Speaker 2>I think we would naturally people think wouldn't be relevant

0:29:17.160 --> 0:29:19.600
<v Speaker 2>to being CEO have been the most relevant. I mentioned

0:29:19.680 --> 0:29:23.120
<v Speaker 2>running the auto finance business and honestly, running the technology department.

0:29:23.320 --> 0:29:25.720
<v Speaker 1>You don't have a background in tech. How hard was

0:29:25.760 --> 0:29:29.280
<v Speaker 1>it to ramp up running a tech division when you're

0:29:29.400 --> 0:29:34.440
<v Speaker 1>not a natural geek And it's almost a different language sometimes.

0:29:34.480 --> 0:29:37.320
<v Speaker 2>So it's funny. I am divorced now, but I was

0:29:37.360 --> 0:29:41.960
<v Speaker 2>married to a guy who was a tech person, and

0:29:42.000 --> 0:29:43.880
<v Speaker 2>I'd always ask them all these questions. I was really

0:29:43.880 --> 0:29:47.400
<v Speaker 2>curious around it, and so I always felt like he

0:29:47.480 --> 0:29:50.400
<v Speaker 2>gave me a really good background in understanding technology. And

0:29:50.440 --> 0:29:54.200
<v Speaker 2>then I learned to be fearless in asking the question right.

0:29:54.440 --> 0:29:57.080
<v Speaker 2>Tech people are used to everybody's being so afraid of

0:29:57.160 --> 0:29:59.800
<v Speaker 2>tech that they give you They can sometimes give you

0:29:59.840 --> 0:30:03.920
<v Speaker 2>a little bit of a blurred answer steam yeah, and

0:30:04.280 --> 0:30:06.800
<v Speaker 2>you're afraid to look stupid, so you don't ask. Well,

0:30:06.840 --> 0:30:09.960
<v Speaker 2>I learned, you know what, if you think about what

0:30:10.000 --> 0:30:12.360
<v Speaker 2>technology is, it's moving this piece of data from here

0:30:12.360 --> 0:30:15.800
<v Speaker 2>to here and maybe adding some new data. Dumb down

0:30:15.800 --> 0:30:17.440
<v Speaker 2>what you're talking about and let me just try to

0:30:17.520 --> 0:30:20.920
<v Speaker 2>understand it right, and and things like cloud servicing right.

0:30:21.120 --> 0:30:23.320
<v Speaker 2>These are concepts that have existed in tech for a

0:30:23.360 --> 0:30:26.160
<v Speaker 2>long time. The technology gets better, and we usually change

0:30:26.160 --> 0:30:29.480
<v Speaker 2>the name about every decade. But once you understand what

0:30:29.600 --> 0:30:33.240
<v Speaker 2>it's trying to achieve, you don't have to be a programmer.

0:30:33.280 --> 0:30:35.440
<v Speaker 2>You just you know. And I honestly, I think one

0:30:35.440 --> 0:30:37.360
<v Speaker 2>of the biggest things that people don't appreciate is the

0:30:37.440 --> 0:30:41.200
<v Speaker 2>quality of data. Truly, garbage in, garbage out, and so

0:30:41.640 --> 0:30:46.000
<v Speaker 2>having discipline around your data management is really really important

0:30:46.000 --> 0:30:46.800
<v Speaker 2>in a tech department.

0:30:46.880 --> 0:30:49.240
<v Speaker 1>It's really hard. Also, we were talking earlier about the

0:30:49.240 --> 0:30:53.760
<v Speaker 1>O'Shaughnessy database. I know that they painstakingly triple check and

0:30:53.800 --> 0:30:56.920
<v Speaker 1>quadruple check stuff because you don't want an errant thing

0:30:57.000 --> 0:31:00.200
<v Speaker 1>in there that will change the outcome of a back

0:31:00.280 --> 0:31:01.400
<v Speaker 1>test or a model.

0:31:01.200 --> 0:31:04.240
<v Speaker 2>For sure. And I think actually we all talk about

0:31:04.240 --> 0:31:08.040
<v Speaker 2>AI and AI understanding and the models that you use,

0:31:08.120 --> 0:31:10.240
<v Speaker 2>and the combination of models is going to be really important.

0:31:10.400 --> 0:31:12.880
<v Speaker 2>But honestly, I think the real competitive advantage is going

0:31:12.920 --> 0:31:14.880
<v Speaker 2>to be and this is why I think scale in

0:31:14.960 --> 0:31:18.560
<v Speaker 2>asset management is so important, is the breadth and depth

0:31:18.800 --> 0:31:22.520
<v Speaker 2>of the database. So we have an investment data like

0:31:22.960 --> 0:31:27.160
<v Speaker 2>that is shared by our eighteen individual investment teams and

0:31:27.280 --> 0:31:29.800
<v Speaker 2>so you know as they contribute. So maybe a team

0:31:29.840 --> 0:31:32.880
<v Speaker 2>like our Global Macro team has fourteen different feeds for

0:31:32.960 --> 0:31:37.360
<v Speaker 2>its ESG framework. They come in it's scrubs centrally. Now

0:31:37.400 --> 0:31:40.320
<v Speaker 2>that data is available to the other teams, right, and

0:31:40.360 --> 0:31:42.360
<v Speaker 2>we think over time it's going to be more about

0:31:42.440 --> 0:31:45.400
<v Speaker 2>what unique data do you have that you can apply

0:31:45.480 --> 0:31:47.240
<v Speaker 2>your models. It's going to be more and more important.

0:31:47.840 --> 0:31:51.200
<v Speaker 1>So let's talk a little bit about your leadership experience.

0:31:51.840 --> 0:31:55.920
<v Speaker 1>Your timing was impeccable. You step into the CEO role

0:31:56.480 --> 0:32:00.400
<v Speaker 1>February twenty twenty, Thank goodness, nothing was about to happen

0:32:00.480 --> 0:32:03.520
<v Speaker 1>over the next three years. What was it like, a

0:32:03.640 --> 0:32:06.960
<v Speaker 1>month into the new gig and suddenly the world shuts down.

0:32:07.040 --> 0:32:11.600
<v Speaker 2>Yeah, well, so I stepped in I think February eleventh,

0:32:11.600 --> 0:32:14.880
<v Speaker 2>I think February twentieth, we announced the acquisition of leg Mason,

0:32:14.880 --> 0:32:16.800
<v Speaker 2>which of course had been in the works right for

0:32:16.920 --> 0:32:18.680
<v Speaker 2>quite a while, so we had good plans in place.

0:32:18.720 --> 0:32:20.920
<v Speaker 2>And then about three weeks later, remember we were going

0:32:21.000 --> 0:32:22.560
<v Speaker 2>to flatten the curve with two weeks off.

0:32:22.640 --> 0:32:25.520
<v Speaker 1>Yeah, that's it turned into two years this Yeah, that

0:32:25.600 --> 0:32:26.360
<v Speaker 1>was transitory.

0:32:26.480 --> 0:32:30.400
<v Speaker 2>Yeah, that was transitory. You know, you just deal with

0:32:30.400 --> 0:32:34.080
<v Speaker 2>the cards that are in front of you. And the

0:32:34.120 --> 0:32:37.520
<v Speaker 2>good news was when I was running technology, I became

0:32:37.720 --> 0:32:41.640
<v Speaker 2>very passionate because we had you know, developers in India,

0:32:41.760 --> 0:32:44.560
<v Speaker 2>uh and kind of around the world, Poland, in various places,

0:32:44.600 --> 0:32:47.280
<v Speaker 2>and I felt like it was really important that you

0:32:47.280 --> 0:32:51.480
<v Speaker 2>could see people when English was a second language, and

0:32:51.560 --> 0:32:54.720
<v Speaker 2>so we push, I pushed the tech team to get

0:32:54.960 --> 0:32:58.480
<v Speaker 2>a desktop video and so we had these devices. They

0:32:58.480 --> 0:33:01.080
<v Speaker 2>were called a Tanberg device, and it's sat separately on

0:33:01.120 --> 0:33:04.680
<v Speaker 2>your desktop, and we would do video calls and so

0:33:05.400 --> 0:33:08.480
<v Speaker 2>the company had you been doing this for twenty.

0:33:08.240 --> 0:33:10.520
<v Speaker 1>Years zoom before Zoom, Yeah, exactly, and.

0:33:11.800 --> 0:33:13.520
<v Speaker 2>So we were comfortable. It was already part of our

0:33:13.600 --> 0:33:17.120
<v Speaker 2>DNA to have meetings where inevitably somebody was on video.

0:33:17.200 --> 0:33:19.400
<v Speaker 2>So it was already kind of how we operated. Now

0:33:19.440 --> 0:33:22.520
<v Speaker 2>you had everybody on video, and I think the thing

0:33:22.560 --> 0:33:26.120
<v Speaker 2>that I appreciated was actually people's finally believed you can

0:33:26.200 --> 0:33:29.440
<v Speaker 2>run businesses that way. And so, you know, in many ways,

0:33:29.440 --> 0:33:33.080
<v Speaker 2>we closed the leg Mason deal two months early, and

0:33:33.120 --> 0:33:34.800
<v Speaker 2>I think it was because we were in some ways

0:33:34.840 --> 0:33:38.360
<v Speaker 2>more efficient by doing it via video, not everybody getting

0:33:38.400 --> 0:33:40.640
<v Speaker 2>on an airplane and going and trying to work your

0:33:40.680 --> 0:33:42.360
<v Speaker 2>calendars to go meet you know.

0:33:42.720 --> 0:33:47.360
<v Speaker 1>The crazy unexpected benefit of the new post nine to

0:33:47.400 --> 0:33:52.200
<v Speaker 1>eleven rules was that everybody had to have backup systems.

0:33:52.240 --> 0:33:55.680
<v Speaker 1>You couldn't just have everything in one location. I think

0:33:55.720 --> 0:33:59.960
<v Speaker 1>the SEC promulgated those, and when people were suddenly forced

0:34:00.200 --> 0:34:03.080
<v Speaker 1>to work from home, it was very easy to get

0:34:03.160 --> 0:34:05.640
<v Speaker 1>or relatively easy to get up and running. Just an

0:34:05.760 --> 0:34:09.120
<v Speaker 1>unexpected side effect of the new regulations that came in

0:34:09.719 --> 0:34:12.960
<v Speaker 1>after you know, we lost the twin towers. It's who

0:34:13.080 --> 0:34:17.440
<v Speaker 1>knew that the SEC can actually be so forward looking

0:34:17.520 --> 0:34:19.960
<v Speaker 1>and hey, you know, it all worked out. We were

0:34:20.000 --> 0:34:21.800
<v Speaker 1>all able to know for sure to get up and

0:34:21.840 --> 0:34:26.759
<v Speaker 1>run it. So were there any complications from all this

0:34:26.880 --> 0:34:30.400
<v Speaker 1>remote work in your CEO transition or you were in

0:34:30.480 --> 0:34:33.000
<v Speaker 1>place when everything hit the fan and you know, it

0:34:33.040 --> 0:34:35.640
<v Speaker 1>was just a matter of tacking into the wind when

0:34:36.520 --> 0:34:37.200
<v Speaker 1>the world changed.

0:34:37.239 --> 0:34:40.719
<v Speaker 2>I mean, I wouldn't attribute anything in particular to that.

0:34:41.040 --> 0:34:43.160
<v Speaker 2>I mean, you're you know, when you do an acquisition,

0:34:43.239 --> 0:34:45.360
<v Speaker 2>one of the most important things you do is assess talent,

0:34:45.480 --> 0:34:49.600
<v Speaker 2>and there's a bias towards your own talent, and it's

0:34:49.600 --> 0:34:52.840
<v Speaker 2>a missed opportunity if you don't infuse your organization with

0:34:52.960 --> 0:34:55.319
<v Speaker 2>talent from the company you acquired. And so we were

0:34:55.400 --> 0:34:57.839
<v Speaker 2>very focused on that. And sure, you'd love to meet

0:34:57.840 --> 0:35:00.480
<v Speaker 2>people in person versus doing zoom in or views, but

0:35:01.600 --> 0:35:02.759
<v Speaker 2>you know, we had to do it that way. We

0:35:02.840 --> 0:35:06.440
<v Speaker 2>ended up with I think two thirds of leg Mason's

0:35:06.480 --> 0:35:09.520
<v Speaker 2>kind of corporate services groups came into Franklin Templeton and

0:35:09.960 --> 0:35:12.520
<v Speaker 2>a big part of the distribution team became part of

0:35:12.520 --> 0:35:16.200
<v Speaker 2>Franklin Templeton. So you know, you're trying to kind of

0:35:16.239 --> 0:35:19.400
<v Speaker 2>build a best athlete, and it's not just the best athlete,

0:35:19.440 --> 0:35:23.400
<v Speaker 2>it's the best team. So sometimes you're just trying to

0:35:23.440 --> 0:35:27.800
<v Speaker 2>make sure the team will you know, coalesce. And I

0:35:27.840 --> 0:35:29.200
<v Speaker 2>think we did a pretty good job of that.

0:35:30.400 --> 0:35:34.040
<v Speaker 1>Really interesting you mentioned your dad. Let's talk about some

0:35:34.200 --> 0:35:41.040
<v Speaker 1>leadership lessons. What did your father teach you about managing people,

0:35:41.360 --> 0:35:45.560
<v Speaker 1>running a company and getting all of the horses pulling

0:35:45.600 --> 0:35:47.560
<v Speaker 1>the cart in the same direction.

0:35:48.239 --> 0:35:50.880
<v Speaker 2>I mean, one of the things my father has always said,

0:35:51.360 --> 0:35:53.000
<v Speaker 2>take care of the client and the business takes care

0:35:53.040 --> 0:35:57.719
<v Speaker 2>of itself. And so anytime there'd be and I still

0:35:57.719 --> 0:36:00.719
<v Speaker 2>talk to them about things. You know, how old now

0:36:00.880 --> 0:36:03.000
<v Speaker 2>he just turned ninety in January.

0:36:02.719 --> 0:36:05.839
<v Speaker 1>And sharp as attack. Absolutely, that's really you got some

0:36:05.880 --> 0:36:06.400
<v Speaker 1>good genes.

0:36:06.480 --> 0:36:12.000
<v Speaker 2>Yeah, amazing, And so you know, if you think about

0:36:12.040 --> 0:36:15.320
<v Speaker 2>that and you overlay that in any decision, is this

0:36:15.400 --> 0:36:18.000
<v Speaker 2>good for the client? Then I think that gives you

0:36:18.040 --> 0:36:19.839
<v Speaker 2>a lot of clarity. It's kind of a north star there.

0:36:20.120 --> 0:36:22.640
<v Speaker 2>And then I'd say, my dad is you know, he's

0:36:22.640 --> 0:36:26.320
<v Speaker 2>always incredibly fair to people, and you recognize that every

0:36:26.400 --> 0:36:29.919
<v Speaker 2>person contributes to who we are as a company. When

0:36:29.960 --> 0:36:33.759
<v Speaker 2>your call center employee picks up the phone and is

0:36:33.800 --> 0:36:37.400
<v Speaker 2>talking to a client, They're shouldering the entire reputation of

0:36:37.440 --> 0:36:40.759
<v Speaker 2>the firm on them with that client. And my dad

0:36:40.760 --> 0:36:43.880
<v Speaker 2>always understood that, and so there's just a genuine respect

0:36:44.040 --> 0:36:47.959
<v Speaker 2>for everybody's contribution to the company, and I think that's

0:36:48.120 --> 0:36:49.000
<v Speaker 2>part of our culture.

0:36:49.200 --> 0:36:54.480
<v Speaker 1>That's really interesting. You mentioned you took a slot from

0:36:54.520 --> 0:36:57.520
<v Speaker 1>your sister when you first started at an entry level.

0:36:57.840 --> 0:37:00.160
<v Speaker 1>I know one of your brothers was very involved with

0:37:00.160 --> 0:37:04.399
<v Speaker 1>with the firm. What's it like dealing with people that

0:37:04.440 --> 0:37:08.800
<v Speaker 1>you have this familial personal relationship. How do you manage

0:37:08.800 --> 0:37:10.959
<v Speaker 1>around that? I would think that's I'm just thinking about

0:37:10.960 --> 0:37:13.839
<v Speaker 1>my own siblings, and we would have killed each other

0:37:13.880 --> 0:37:15.160
<v Speaker 1>and gone bankrupt long ago.

0:37:15.680 --> 0:37:18.800
<v Speaker 2>Everybody asked me, is this succession our family?

0:37:18.840 --> 0:37:20.800
<v Speaker 1>I wasn't even thinking about that. I'm just thinking about

0:37:20.800 --> 0:37:23.600
<v Speaker 1>my own family, and I know there would have been bloodshed,

0:37:23.680 --> 0:37:25.480
<v Speaker 1>But how do you navigate that?

0:37:25.680 --> 0:37:28.759
<v Speaker 2>A challenging They were definitely tires of where I'd say

0:37:28.800 --> 0:37:30.719
<v Speaker 2>to my brother, listen, stop, you can't treat me like

0:37:31.080 --> 0:37:35.799
<v Speaker 2>your little sister in a meeting. But no, right, But

0:37:36.000 --> 0:37:38.560
<v Speaker 2>you know what, as a family, we get along great.

0:37:38.640 --> 0:37:40.799
<v Speaker 2>And my brother and I get along great, and you know,

0:37:40.840 --> 0:37:44.359
<v Speaker 2>he's still executive chairman today, and you know, we talk

0:37:44.440 --> 0:37:46.480
<v Speaker 2>about parts of the business, things that I'm struggling with.

0:37:46.520 --> 0:37:48.040
<v Speaker 2>I'll talk to him, I'll talk to my dad.

0:37:48.480 --> 0:37:48.680
<v Speaker 3>Uh.

0:37:48.719 --> 0:37:53.480
<v Speaker 2>And I got to tell you what a great privilege

0:37:53.520 --> 0:37:56.759
<v Speaker 2>it is to be a CEO and have people who

0:37:57.120 --> 0:37:59.960
<v Speaker 2>care so much like you do, to be able to

0:38:00.080 --> 0:38:02.240
<v Speaker 2>talk to about things that you're thinking about.

0:38:02.320 --> 0:38:04.040
<v Speaker 1>You go to them for advice all the time.

0:38:04.160 --> 0:38:06.920
<v Speaker 2>We'll talk about you know, before any acquisition is done.

0:38:07.040 --> 0:38:10.279
<v Speaker 2>That's clearly you know, part of the conversation. As well

0:38:10.280 --> 0:38:12.880
<v Speaker 2>as my uncle. My uncle is still active in the firm,

0:38:12.920 --> 0:38:16.160
<v Speaker 2>and so you know, we'll have conversations about what we think,

0:38:16.320 --> 0:38:20.960
<v Speaker 2>does it make sense? And you know, it's just my father,

0:38:21.440 --> 0:38:24.880
<v Speaker 2>my uncle, my brother will never say you have to

0:38:24.960 --> 0:38:28.200
<v Speaker 2>do this. They'll say, here the thinking on it. And

0:38:28.239 --> 0:38:29.719
<v Speaker 2>my brother would say the same thing when he was

0:38:30.000 --> 0:38:33.160
<v Speaker 2>CEO for fifteen years. My father was a great resource,

0:38:33.239 --> 0:38:36.440
<v Speaker 2>but never would tell you what to do. And so

0:38:36.680 --> 0:38:39.160
<v Speaker 2>it's nice to have those voices in the room. But

0:38:39.239 --> 0:38:41.520
<v Speaker 2>in the end, the decisions mine as a CEO with

0:38:41.560 --> 0:38:46.960
<v Speaker 2>my board and my management team, and they're just great advisors.

0:38:47.440 --> 0:38:52.040
<v Speaker 1>That's great. I love the stock symbol ben right, I

0:38:52.080 --> 0:38:58.600
<v Speaker 1>mean so great, you talked earlier about long termism versus

0:38:58.600 --> 0:39:03.160
<v Speaker 1>short termism. The family still owns like forty percent of

0:39:03.160 --> 0:39:06.640
<v Speaker 1>the outstanding shares. Yes, does that insulate you from the

0:39:06.680 --> 0:39:11.480
<v Speaker 1>sort of short term activist? What about this quarter's returns

0:39:11.560 --> 0:39:15.440
<v Speaker 1>when you're making those long term investments in technology? How

0:39:15.480 --> 0:39:17.560
<v Speaker 1>does that affect how you navigate? Yeah?

0:39:17.680 --> 0:39:19.920
<v Speaker 2>No, I mean for sure, you're you. The risk in

0:39:20.000 --> 0:39:22.440
<v Speaker 2>asset management is that an activist comes in and says,

0:39:22.640 --> 0:39:24.160
<v Speaker 2>you know what, why don't we spin off all these

0:39:24.160 --> 0:39:26.520
<v Speaker 2>groups because we can get a bigger multiple for the

0:39:26.560 --> 0:39:29.840
<v Speaker 2>alts business and you know various things, and and that

0:39:29.840 --> 0:39:33.680
<v Speaker 2>that is a short term gain, right, and doesn't build

0:39:33.680 --> 0:39:36.000
<v Speaker 2>a long sustainable business. So it's better to have that,

0:39:36.120 --> 0:39:39.600
<v Speaker 2>you know, for and I genuinely believe scale is going

0:39:39.680 --> 0:39:41.120
<v Speaker 2>to be more and more important as I mentioned, for

0:39:41.200 --> 0:39:44.840
<v Speaker 2>things like data for asset managers, and so building a

0:39:44.880 --> 0:39:47.480
<v Speaker 2>long term business really important. An activist doesn't take on

0:39:47.520 --> 0:39:50.480
<v Speaker 2>a company that's got a forty percent you know, control,

0:39:50.640 --> 0:39:53.759
<v Speaker 2>because you can't get enough stock to be able to

0:39:53.840 --> 0:39:56.840
<v Speaker 2>ultimately you know, right, again, it's.

0:39:56.960 --> 0:39:59.880
<v Speaker 1>Ninety percent of the remaining sixty it's it's so that

0:40:00.000 --> 0:40:02.080
<v Speaker 1>it does create a little bit of a buffer. So

0:40:02.200 --> 0:40:05.920
<v Speaker 1>you guys can think very long term, make acquisitions and

0:40:05.960 --> 0:40:09.880
<v Speaker 1>make investments which other publicly traded companies.

0:40:09.560 --> 0:40:13.200
<v Speaker 2>Might not have that luxury, right, And we're totally aligned

0:40:13.239 --> 0:40:16.400
<v Speaker 2>with the shareholders because we're looking for the best outcome

0:40:16.520 --> 0:40:20.640
<v Speaker 2>for the stock. And again sometimes that's making some investments

0:40:20.680 --> 0:40:22.400
<v Speaker 2>today that you know will pay off in a few years.

0:40:22.520 --> 0:40:25.680
<v Speaker 1>So this is a ridiculous question, but tell us about

0:40:25.680 --> 0:40:29.359
<v Speaker 1>your next acquisition, meaning I don't expect you to say

0:40:29.360 --> 0:40:32.600
<v Speaker 1>we're gonna pay X for this. Like what areas do

0:40:32.640 --> 0:40:35.719
<v Speaker 1>you think are interesting? Where are you looking to say, hey,

0:40:35.760 --> 0:40:39.640
<v Speaker 1>we can acquire some talent and some technology in this space.

0:40:40.080 --> 0:40:45.240
<v Speaker 2>So with respect to kind of product gaps, the only

0:40:45.360 --> 0:40:47.320
<v Speaker 2>one that we really feel is out there as a

0:40:47.360 --> 0:40:50.600
<v Speaker 2>gap is infrastructure. So if interesting because we think there's

0:40:50.600 --> 0:40:51.440
<v Speaker 2>gonna be a lot of growth.

0:40:51.400 --> 0:40:53.480
<v Speaker 1>On the bond side or on the equity side.

0:40:53.840 --> 0:40:58.640
<v Speaker 2>Probably equity, but because we can do on the private

0:40:58.640 --> 0:41:00.200
<v Speaker 2>credit teams, they can do it on them on the

0:41:00.239 --> 0:41:03.440
<v Speaker 2>bond side, but it would be that would be an

0:41:03.480 --> 0:41:08.200
<v Speaker 2>area that would be interesting to us. We like local

0:41:08.239 --> 0:41:11.000
<v Speaker 2>asset management, so you know we have clients one hundred

0:41:11.000 --> 0:41:15.040
<v Speaker 2>and fifty five countries. People tend to like home, they

0:41:15.080 --> 0:41:18.600
<v Speaker 2>have a home country bias, so you know eighty percent

0:41:18.680 --> 0:41:21.320
<v Speaker 2>flows in India tend to go to domestic products. We

0:41:21.520 --> 0:41:24.560
<v Speaker 2>were the first foreign manager in India and so we

0:41:24.680 --> 0:41:27.000
<v Speaker 2>have local equity, local fixed income, but we look for

0:41:27.080 --> 0:41:30.240
<v Speaker 2>markets that made sense to us. We'd be a buyer

0:41:30.280 --> 0:41:33.720
<v Speaker 2>of a local asset management. We have them spattered throughout

0:41:34.000 --> 0:41:37.120
<v Speaker 2>the world. And then, as I mentioned on the distribution side,

0:41:37.160 --> 0:41:39.960
<v Speaker 2>anything that builds that deeper relationship that can help us

0:41:40.200 --> 0:41:40.920
<v Speaker 2>with distribution.

0:41:41.160 --> 0:41:43.359
<v Speaker 1>So I don't want to talk about politics. I want

0:41:43.360 --> 0:41:47.279
<v Speaker 1>to talk about culture and environment. We're recording this. We

0:41:47.360 --> 0:41:50.880
<v Speaker 1>have President Modi here in the US. India seems to

0:41:50.920 --> 0:41:56.200
<v Speaker 1>be like a perennial next economic powerhouse after China, and

0:41:56.280 --> 0:42:00.359
<v Speaker 1>it just always seems to be not catching that next

0:42:00.400 --> 0:42:03.360
<v Speaker 1>bid when you look at a region like that, and

0:42:03.360 --> 0:42:05.399
<v Speaker 1>I don't want to just talk about India, but if

0:42:05.440 --> 0:42:07.680
<v Speaker 1>you're looking at India, or you're looking at China, or

0:42:07.719 --> 0:42:12.680
<v Speaker 1>you're looking at Taiwan or Singapore or Korea or Vietnam,

0:42:13.400 --> 0:42:17.160
<v Speaker 1>how do you think about building a presence in a

0:42:17.200 --> 0:42:22.680
<v Speaker 1>place like that and developing a relationship, either building or

0:42:22.719 --> 0:42:27.520
<v Speaker 1>acquiring a local entity, Because how do you pick. Let's

0:42:27.520 --> 0:42:30.279
<v Speaker 1>focus on this region over that region. It seems like

0:42:30.760 --> 0:42:33.120
<v Speaker 1>it changes from week to week, month to month.

0:42:33.640 --> 0:42:38.600
<v Speaker 2>It's going to matter the demographics of a country, the growth,

0:42:39.360 --> 0:42:42.160
<v Speaker 2>the policies, the regulation, all those going to the factors.

0:42:42.160 --> 0:42:46.520
<v Speaker 2>I mean, we were in India in nineteen ninety five,

0:42:46.640 --> 0:42:50.600
<v Speaker 2>We're in Taiwan in nineteen eighty five, China first investments

0:42:50.640 --> 0:42:54.239
<v Speaker 2>in nineteen eighty eight. So you know, we look at

0:42:54.239 --> 0:42:56.440
<v Speaker 2>those Asia is going to be. They say there's going

0:42:56.480 --> 0:42:59.000
<v Speaker 2>to be a billion people who enter the middle class

0:42:59.000 --> 0:43:01.360
<v Speaker 2>in the next decade, and eighty seven percent of them

0:43:01.360 --> 0:43:04.320
<v Speaker 2>we're going to be in Asia. I lived in India

0:43:04.360 --> 0:43:06.080
<v Speaker 2>for a little while when I was running the Technology

0:43:06.080 --> 0:43:09.680
<v Speaker 2>and Operations Group, and I can tell you fifty six

0:43:09.760 --> 0:43:12.120
<v Speaker 2>percent of the population is under the age of twenty five.

0:43:12.640 --> 0:43:17.320
<v Speaker 2>It's got a British legal system, a British education system.

0:43:17.480 --> 0:43:20.680
<v Speaker 2>You know, while there's twenty three different languages that are spoken,

0:43:20.719 --> 0:43:24.840
<v Speaker 2>and more dialogical English. You know that certainly you aspire

0:43:24.880 --> 0:43:27.239
<v Speaker 2>to speak English, and so the people that you hire

0:43:27.280 --> 0:43:29.879
<v Speaker 2>from colleges are all English speaking. So that's those are

0:43:29.880 --> 0:43:33.960
<v Speaker 2>all great tailwinds for the economy. Many people say, you know,

0:43:34.000 --> 0:43:36.040
<v Speaker 2>India grows at night when the government sleeps. I think

0:43:36.120 --> 0:43:39.319
<v Speaker 2>Moty's been doing a really terrific job at you know,

0:43:39.360 --> 0:43:43.520
<v Speaker 2>trying to to you know, reduce the amount of kind

0:43:43.520 --> 0:43:47.600
<v Speaker 2>of bureaucracy that's there. I have to say that my

0:43:47.800 --> 0:43:50.719
<v Speaker 2>observation when I would be excited by all those statistics

0:43:51.120 --> 0:43:54.040
<v Speaker 2>was Indians were the most skeptical about India. On my

0:43:54.160 --> 0:43:58.560
<v Speaker 2>last trip, it was a clear difference in view that

0:43:58.560 --> 0:44:03.600
<v Speaker 2>that in India, India and Indian Americans are really excited

0:44:03.600 --> 0:44:06.080
<v Speaker 2>about what's going on. And for the first time I

0:44:06.200 --> 0:44:10.200
<v Speaker 2>found an optimism there that I hadn't really sensed before.

0:44:10.400 --> 0:44:13.920
<v Speaker 1>That's so interesting because that's what I meant by they're

0:44:13.920 --> 0:44:19.080
<v Speaker 1>perennially about to happen, Like they can very easily be

0:44:21.440 --> 0:44:26.400
<v Speaker 1>on par with China in terms of their economic prowess.

0:44:27.440 --> 0:44:30.359
<v Speaker 1>More along the lines on technology and software and other

0:44:30.400 --> 0:44:34.920
<v Speaker 1>areas where clearly there's a huge, huge infrastructure there and

0:44:34.960 --> 0:44:37.400
<v Speaker 1>it just seems to like always be about to happen.

0:44:37.440 --> 0:44:38.200
<v Speaker 1>It never happens.

0:44:38.280 --> 0:44:41.040
<v Speaker 2>Well, you know, they say there's six times the number

0:44:41.040 --> 0:44:43.960
<v Speaker 2>of engineers that graduate in India every year than the US.

0:44:44.640 --> 0:44:47.919
<v Speaker 2>And I can tell you, you know, an India would

0:44:47.960 --> 0:44:50.279
<v Speaker 2>prefer to go to an I than Harvard. They look

0:44:50.280 --> 0:44:53.440
<v Speaker 2>at Harvard as a safety school. I mean really and

0:44:53.680 --> 0:44:54.160
<v Speaker 2>so I.

0:44:54.160 --> 0:44:57.440
<v Speaker 1>T though, is really still very difficult, right I go.

0:44:58.239 --> 0:45:00.480
<v Speaker 2>But the its are pretty phenomenal and.

0:45:00.880 --> 0:45:04.600
<v Speaker 1>We end up, you know, importing a decent number of

0:45:04.760 --> 0:45:08.240
<v Speaker 1>engineers from the best Indian schools. Is that still going

0:45:08.280 --> 0:45:09.080
<v Speaker 1>on the way it used to?

0:45:09.280 --> 0:45:10.880
<v Speaker 2>Well, I think a lot of them are deciding that

0:45:10.920 --> 0:45:13.160
<v Speaker 2>there's more opportunity even at home. It used to be

0:45:13.200 --> 0:45:15.759
<v Speaker 2>they had to come to the US or Europe because

0:45:15.760 --> 0:45:17.319
<v Speaker 2>that was going to be where the opportunity is. But

0:45:17.360 --> 0:45:20.719
<v Speaker 2>now the domestic economy is growing so well that there's

0:45:20.719 --> 0:45:24.520
<v Speaker 2>a lot of excitement, so there's less choosing to leave.

0:45:25.400 --> 0:45:27.239
<v Speaker 2>And then I think, you know, China, A lot a

0:45:27.239 --> 0:45:30.480
<v Speaker 2>lot of discussion around China. You know, China's what's the

0:45:30.560 --> 0:45:33.160
<v Speaker 2>US twenty three percent of world's GDP in China is

0:45:33.200 --> 0:45:35.560
<v Speaker 2>eighteen percent, the next the third is like Japan at

0:45:35.600 --> 0:45:38.600
<v Speaker 2>four point nine. I mean, it's a big, big market

0:45:38.800 --> 0:45:43.640
<v Speaker 2>and it's going to be important, and so you know,

0:45:43.719 --> 0:45:47.719
<v Speaker 2>we have a joint venture there and we continue to

0:45:48.400 --> 0:45:52.080
<v Speaker 2>you know, invest in China. But then there's other markets

0:45:52.120 --> 0:45:55.040
<v Speaker 2>you know that you look at There're three hundred million

0:45:55.040 --> 0:45:58.840
<v Speaker 2>people in Indonesia. They get their policies, right, it's going

0:45:58.920 --> 0:46:02.680
<v Speaker 2>to be amazing growth. Vietnam, you know another one. Capital

0:46:02.719 --> 0:46:05.040
<v Speaker 2>markets are really tough there, but you know it should

0:46:05.080 --> 0:46:07.319
<v Speaker 2>be a great opportunity and growth. And you see some

0:46:07.360 --> 0:46:09.960
<v Speaker 2>of the supply chains. People are diversifying. India as one

0:46:09.960 --> 0:46:13.400
<v Speaker 2>of the beneficiaries of that. Vietnam is another beneficiary of that.

0:46:14.040 --> 0:46:16.920
<v Speaker 2>Japan even in the case of semiconductors. So I think

0:46:16.920 --> 0:46:20.240
<v Speaker 2>there's just a lot going on there that is pretty interesting.

0:46:20.280 --> 0:46:23.160
<v Speaker 2>And then the Middle East is another amazing Yeah.

0:46:23.120 --> 0:46:26.600
<v Speaker 1>They seem to be purposefully trying to morph their reliance

0:46:26.680 --> 0:46:31.240
<v Speaker 1>away from crude oil and energy towards more modern technologies.

0:46:31.760 --> 0:46:34.360
<v Speaker 1>How can you even think about making an investment in

0:46:34.360 --> 0:46:37.480
<v Speaker 1>the Middle East on anything other than oil. That's no

0:46:37.560 --> 0:46:38.320
<v Speaker 1>longer the case.

0:46:38.400 --> 0:46:41.200
<v Speaker 2>Right, I mean, I think what's interesting is they think

0:46:41.640 --> 0:46:45.439
<v Speaker 2>like a generational family thinks, right, and so in their

0:46:45.520 --> 0:46:48.120
<v Speaker 2>mind oil runs out. I don't get three generations for

0:46:48.280 --> 0:46:51.879
<v Speaker 2>whatever it is. They want to reinvest in their economies

0:46:52.239 --> 0:46:54.600
<v Speaker 2>to diversify it, to ensure that they're not out of

0:46:54.600 --> 0:46:58.520
<v Speaker 2>money when that happens, right, And I actually genuinely believe

0:46:58.560 --> 0:47:01.480
<v Speaker 2>some of the greatest innovation on renewable energy is going

0:47:01.520 --> 0:47:05.320
<v Speaker 2>to come out of places like Abu Dhabi and Saudi

0:47:05.360 --> 0:47:08.880
<v Speaker 2>Arabia because they are investing in it and they have

0:47:08.960 --> 0:47:11.320
<v Speaker 2>the balance sheet to be able to make those investments.

0:47:11.560 --> 0:47:15.120
<v Speaker 1>And keep in mind, oil isn't going to go away.

0:47:15.440 --> 0:47:18.000
<v Speaker 1>It's just gonna go away as an energy source. As

0:47:18.040 --> 0:47:22.399
<v Speaker 1>a material science source, it's enormous. The old joke used

0:47:22.400 --> 0:47:25.600
<v Speaker 1>to be the Arab cheek says to the American businessman,

0:47:25.680 --> 0:47:28.320
<v Speaker 1>we're selling you all this oil. We can't believe you guys.

0:47:28.320 --> 0:47:30.640
<v Speaker 1>Burn this. You know what it's really good for. You

0:47:30.640 --> 0:47:33.839
<v Speaker 1>can make it into a million different things, and that's

0:47:33.840 --> 0:47:37.560
<v Speaker 1>the future of oil, not energy, but materials. So you

0:47:37.719 --> 0:47:40.400
<v Speaker 1>have confidence in what's going to take place in the

0:47:40.400 --> 0:47:44.400
<v Speaker 1>Middle East. How does one invest into that region? If

0:47:44.440 --> 0:47:47.440
<v Speaker 1>you're a retail investor, Hey, I like the idea of India,

0:47:47.520 --> 0:47:50.000
<v Speaker 1>I could go buy an ETF. I like the idea

0:47:50.040 --> 0:47:52.360
<v Speaker 1>of Middle East. How do I invest in that?

0:47:52.480 --> 0:47:52.600
<v Speaker 3>Well?

0:47:52.640 --> 0:47:54.960
<v Speaker 2>I think you got to spend a lot of time

0:47:54.960 --> 0:47:58.160
<v Speaker 2>there and go see because I took my executive committee

0:47:58.160 --> 0:48:03.080
<v Speaker 2>to the Middle East. We have visited several countries there

0:48:03.600 --> 0:48:06.319
<v Speaker 2>and honestly, I think that many of them felt that

0:48:06.360 --> 0:48:10.240
<v Speaker 2>we were going there to, you know, think about raising

0:48:10.280 --> 0:48:12.920
<v Speaker 2>money from that region and came away thinking they're going

0:48:12.960 --> 0:48:15.719
<v Speaker 2>to be investment opportunities there. We actually acquired in two

0:48:15.760 --> 0:48:18.040
<v Speaker 2>thousand and seven a local asset management I mentioned local

0:48:18.040 --> 0:48:21.960
<v Speaker 2>asset management being important, So a local asset management team

0:48:22.840 --> 0:48:25.920
<v Speaker 2>that's based We've been in Dubai about twenty years and

0:48:25.960 --> 0:48:32.200
<v Speaker 2>we're the largest I think, you know, multinational Sharia manager

0:48:32.239 --> 0:48:33.360
<v Speaker 2>for Islamic finance.

0:48:33.440 --> 0:48:33.640
<v Speaker 1>Huh.

0:48:33.680 --> 0:48:36.279
<v Speaker 2>They came out of that local team and so they

0:48:36.280 --> 0:48:40.440
<v Speaker 2>do local GCC bonds and equity investments. So there's a

0:48:40.440 --> 0:48:42.120
<v Speaker 2>lot opportunity I think to invest there.

0:48:42.239 --> 0:48:45.799
<v Speaker 1>Huh. Really quite fascinating. So let's talk a little bit

0:48:45.800 --> 0:48:49.839
<v Speaker 1>about what's going on in the world today. We've seen

0:48:49.880 --> 0:48:53.720
<v Speaker 1>this massive change in rate regimes. How does that affect

0:48:53.760 --> 0:48:56.120
<v Speaker 1>your ability to run the firm and how does the

0:48:56.160 --> 0:49:00.359
<v Speaker 1>affect fund managers dealing with this sun in five hundred

0:49:00.400 --> 0:49:01.800
<v Speaker 1>bases point increase in rates.

0:49:02.600 --> 0:49:05.880
<v Speaker 2>Well, I think the good news is that fixed income

0:49:05.960 --> 0:49:08.400
<v Speaker 2>is now actually an asset class you want to be in.

0:49:08.400 --> 0:49:13.480
<v Speaker 2>And you exciting yelled exactly, and so you know, I

0:49:13.520 --> 0:49:16.880
<v Speaker 2>think that's that's terrific, right, And then you know the

0:49:16.920 --> 0:49:20.200
<v Speaker 2>other thing is volatility is good for active managers, right,

0:49:20.360 --> 0:49:23.440
<v Speaker 2>It shows whether you have skill, and we've we've come

0:49:23.480 --> 0:49:27.120
<v Speaker 2>off a decade where basically government's been pumping money into

0:49:27.120 --> 0:49:30.000
<v Speaker 2>the system. If you didn't have access to private markets,

0:49:30.040 --> 0:49:32.000
<v Speaker 2>you couldn't make any money in fixed income. So where'd

0:49:32.040 --> 0:49:36.319
<v Speaker 2>you go? You went into equities. It just exploded equities up.

0:49:36.480 --> 0:49:40.720
<v Speaker 1>And was that twenty twenty fourteen fifteen percent years exactly?

0:49:40.800 --> 0:49:42.320
<v Speaker 1>That's that's double normal.

0:49:42.360 --> 0:49:44.680
<v Speaker 2>But it was hard if you're if you are an

0:49:44.760 --> 0:49:49.120
<v Speaker 2>active manager, your job is to have a diversified portfolio

0:49:49.160 --> 0:49:52.880
<v Speaker 2>and think about risk adjusted returns. And when you have

0:49:52.920 --> 0:49:56.760
<v Speaker 2>a momentum market like that and you have five companies

0:49:56.800 --> 0:49:58.600
<v Speaker 2>that take you know, twenty five percent of the index

0:49:58.680 --> 0:50:02.280
<v Speaker 2>or whatever it ended up, being a professional manager gets

0:50:02.320 --> 0:50:04.680
<v Speaker 2>nervous by that type of concentration, and say the S

0:50:04.760 --> 0:50:07.319
<v Speaker 2>and P five hundred, and there's not enough discussion about

0:50:07.320 --> 0:50:12.200
<v Speaker 2>how the indexes. The market risk of the index changes

0:50:12.360 --> 0:50:14.800
<v Speaker 2>depending on one you know, the day Tesla was added

0:50:14.840 --> 0:50:16.680
<v Speaker 2>to the S and P five hundred, it became a

0:50:16.800 --> 0:50:20.120
<v Speaker 2>much riskier investment by investing the S and P five

0:50:20.200 --> 0:50:23.799
<v Speaker 2>hundred based on volatility and concentration. And so in those

0:50:23.840 --> 0:50:26.520
<v Speaker 2>types of market it's hard for an active manager to

0:50:26.600 --> 0:50:29.279
<v Speaker 2>actually beat that but when you have volatility, that's when

0:50:29.280 --> 0:50:31.360
<v Speaker 2>you start to see outperformance.

0:50:31.760 --> 0:50:34.840
<v Speaker 1>Huh. So let's talk about money market funds. Not only

0:50:34.880 --> 0:50:40.320
<v Speaker 1>are you seeing some yield on fixed income products, money

0:50:40.320 --> 0:50:43.600
<v Speaker 1>market funds used to yield nothing. Now you're actually seeing

0:50:43.640 --> 0:50:49.160
<v Speaker 1>some returns. Even though there's been some concerns about some

0:50:49.200 --> 0:50:53.360
<v Speaker 1>of the regulation around money market funds and the problem

0:50:53.400 --> 0:50:57.240
<v Speaker 1>we had in the financial crisis. What is Franklin Templeton

0:50:57.360 --> 0:50:58.160
<v Speaker 1>doing in this space?

0:50:58.360 --> 0:50:59.799
<v Speaker 2>Well, first of all, I don't think money market funds

0:50:59.840 --> 0:51:02.560
<v Speaker 2>look anything like they did when you had problems and

0:51:02.880 --> 0:51:05.440
<v Speaker 2>you just had a couple of huge difference and so

0:51:06.239 --> 0:51:09.719
<v Speaker 2>you know, there's if you have a certain amount of

0:51:09.800 --> 0:51:12.759
<v Speaker 2>risk and you're a prime floating fund. Otherwise you're you're

0:51:12.840 --> 0:51:15.800
<v Speaker 2>you know, tied to the dollar and it's it's short duration,

0:51:16.000 --> 0:51:20.279
<v Speaker 2>and uh, you know, I think very secure. And you

0:51:20.320 --> 0:51:22.320
<v Speaker 2>know today you can get five and a half percent

0:51:22.320 --> 0:51:25.359
<v Speaker 2>in the money market fund. I mean that's pretty aggressive, right, really,

0:51:25.680 --> 0:51:29.440
<v Speaker 2>And I think that we've seen a lot of money

0:51:29.440 --> 0:51:32.680
<v Speaker 2>flow into money market funds because people saw that they

0:51:32.719 --> 0:51:35.040
<v Speaker 2>could get that and they weren't ready to get back

0:51:35.080 --> 0:51:37.560
<v Speaker 2>into the market. Now, having said that, we're close to

0:51:37.600 --> 0:51:40.920
<v Speaker 2>the end of the cycle. Uh, you know the rate

0:51:41.000 --> 0:51:43.680
<v Speaker 2>hike se right, Okay, you know, I think the FED

0:51:43.800 --> 0:51:46.160
<v Speaker 2>is saying they're going to still raise more, and I

0:51:46.200 --> 0:51:48.360
<v Speaker 2>think you could see one to two more times that

0:51:48.400 --> 0:51:50.440
<v Speaker 2>they raise this year. I think I think people are

0:51:50.440 --> 0:51:52.839
<v Speaker 2>finally over the they're going to cut this year. I

0:51:52.880 --> 0:51:54.399
<v Speaker 2>definitely don't think they're going to cut this year.

0:51:55.400 --> 0:51:57.120
<v Speaker 1>Those are the same people, by the way, who have

0:51:57.160 --> 0:52:00.239
<v Speaker 1>been forecasting recession for the past eighteen months. Yeah, so

0:52:00.320 --> 0:52:02.120
<v Speaker 1>of course they think the FED is going to cut.

0:52:03.200 --> 0:52:07.880
<v Speaker 1>What I find fascinating about the whole FED investor community

0:52:07.960 --> 0:52:11.360
<v Speaker 1>thing is that Jay Pal keeps saying this is what

0:52:11.400 --> 0:52:14.480
<v Speaker 1>I'm going to do, and nobody really right. I mean,

0:52:14.520 --> 0:52:16.600
<v Speaker 1>go back twenty years, you had no idea what the

0:52:16.640 --> 0:52:19.760
<v Speaker 1>FED was doing. He's telling you. Nobody wants to believe.

0:52:19.920 --> 0:52:22.440
<v Speaker 2>You know why. A huge percentage of fixed income managers

0:52:22.600 --> 0:52:26.000
<v Speaker 2>have only lived through the time that the FED bailed

0:52:26.040 --> 0:52:28.319
<v Speaker 2>us out every time, right, right, And so they've been

0:52:28.360 --> 0:52:30.759
<v Speaker 2>in that and so they believe that that's going to

0:52:30.760 --> 0:52:33.200
<v Speaker 2>be the response. Whereas people that have a little more

0:52:33.239 --> 0:52:37.840
<v Speaker 2>experience like me, you right, we know that you can't always,

0:52:37.840 --> 0:52:40.440
<v Speaker 2>you know, count on the FED to bail you out

0:52:40.480 --> 0:52:42.680
<v Speaker 2>as a matter of fact, Jaypal's trying to be very

0:52:42.719 --> 0:52:45.160
<v Speaker 2>clear with it, and the market keeps fighting the FED

0:52:45.239 --> 0:52:47.280
<v Speaker 2>and thinking, you know, they're going to call his bluff

0:52:47.320 --> 0:52:49.920
<v Speaker 2>or something. I think that the FED is being very

0:52:50.000 --> 0:52:53.880
<v Speaker 2>data driven at this point and uh, and he's trying

0:52:53.960 --> 0:52:57.600
<v Speaker 2>to make it clear that if they're the economy still

0:52:57.640 --> 0:52:59.959
<v Speaker 2>remains pretty hot, he's going to raise rates.

0:53:00.680 --> 0:53:03.799
<v Speaker 1>Here's a crazy stat that someone shared with me. If

0:53:03.800 --> 0:53:08.160
<v Speaker 1>you were born after nineteen eighty and you work in finance,

0:53:08.960 --> 0:53:11.480
<v Speaker 1>you don't know what it was like when we had

0:53:11.520 --> 0:53:13.920
<v Speaker 1>no idea what the FED. I remember we used to

0:53:13.960 --> 0:53:17.440
<v Speaker 1>look at the Flow of Funds report to try and

0:53:17.560 --> 0:53:20.520
<v Speaker 1>tease out what might happen. Now the FED says we're

0:53:20.520 --> 0:53:22.080
<v Speaker 1>going to do this, and then they go out and

0:53:22.120 --> 0:53:25.600
<v Speaker 1>do it. I'm born before nineteen eighty, so this is

0:53:25.640 --> 0:53:29.359
<v Speaker 1>all new to me. But imagine spending your whole career where,

0:53:30.560 --> 0:53:33.160
<v Speaker 1>of course we're gonna get bailed out by the FED.

0:53:33.160 --> 0:53:36.040
<v Speaker 1>If that happens, how do you recover from that as

0:53:36.040 --> 0:53:41.520
<v Speaker 1>a professional. If you've never experienced wild market I guess

0:53:41.560 --> 0:53:45.440
<v Speaker 1>that isn't true, because you have experienced wild market volatility.

0:53:45.520 --> 0:53:47.400
<v Speaker 1>Just the cavalry has always come to the rescue.

0:53:47.440 --> 0:53:49.239
<v Speaker 2>That's right. I think that's right. And I don't think that,

0:53:49.880 --> 0:53:53.239
<v Speaker 2>you know, I don't think that the FED is going

0:53:53.320 --> 0:53:55.720
<v Speaker 2>to oh I as I said, I think the FED

0:53:56.320 --> 0:53:59.920
<v Speaker 2>is going to be very data driven. And right now,

0:54:00.680 --> 0:54:03.240
<v Speaker 2>you know, unemployment is still what is it three point.

0:54:03.040 --> 0:54:05.600
<v Speaker 1>Seven very low, right, historically low level.

0:54:05.680 --> 0:54:08.680
<v Speaker 2>You're starting to see some labor participation coming back in

0:54:08.760 --> 0:54:10.920
<v Speaker 2>a little bit. You know, look at a lot of

0:54:10.920 --> 0:54:12.920
<v Speaker 2>people say is there gonna be a recession or not?

0:54:13.520 --> 0:54:16.440
<v Speaker 2>There probably is. I mean they have to write, I

0:54:16.480 --> 0:54:18.319
<v Speaker 2>mean that they have to cool it down. The question

0:54:18.400 --> 0:54:20.520
<v Speaker 2>is is it a deep recession that causes a lot.

0:54:21.080 --> 0:54:23.080
<v Speaker 2>We don't think, or at least I don't think. And

0:54:23.280 --> 0:54:25.279
<v Speaker 2>by the way, we have five different fixed income teams

0:54:25.320 --> 0:54:27.520
<v Speaker 2>at Franklin Templetons, so there are some different views on this.

0:54:28.040 --> 0:54:31.920
<v Speaker 2>But that we'll have a deep recession. Uh and uh.

0:54:32.160 --> 0:54:35.279
<v Speaker 2>You know, but the FED is definitely jammed on the

0:54:35.320 --> 0:54:37.480
<v Speaker 2>brakes and it's still been hard.

0:54:37.880 --> 0:54:38.040
<v Speaker 1>You know.

0:54:38.080 --> 0:54:40.520
<v Speaker 2>The easy part was getting inflation from nine to five

0:54:41.000 --> 0:54:43.360
<v Speaker 2>four and a half. Now is the real challenge.

0:54:43.760 --> 0:54:47.040
<v Speaker 1>So less PPI that came out had a three handle

0:54:47.080 --> 0:54:52.719
<v Speaker 1>on it. CPI usually follows PPI. J PAL can put

0:54:52.719 --> 0:54:55.000
<v Speaker 1>a flag in the ground to clare victory. Take a

0:54:55.000 --> 0:54:59.839
<v Speaker 1>long vacation. He's already won, right, Is am I oversimplifying

0:54:59.880 --> 0:55:02.319
<v Speaker 1>that too much? Or can can he just say all right,

0:55:02.520 --> 0:55:03.680
<v Speaker 1>I'm taking the summer off.

0:55:04.120 --> 0:55:07.240
<v Speaker 2>Well. I think the challenge for him is that they've

0:55:07.239 --> 0:55:11.040
<v Speaker 2>been very vocal about the two percent target, and which is.

0:55:11.040 --> 0:55:14.480
<v Speaker 1>A little weird because two percent target was post nine

0:55:14.520 --> 0:55:18.160
<v Speaker 1>to eleven, post financial crisis, post pandemic, where rates were

0:55:18.200 --> 0:55:22.640
<v Speaker 1>at zero and two percent was the upside target. Maybe

0:55:22.680 --> 0:55:25.560
<v Speaker 1>that target should be rethought. Maybe three percent makes sense.

0:55:26.000 --> 0:55:29.319
<v Speaker 2>So until we start to hear the FED start talking

0:55:29.360 --> 0:55:31.920
<v Speaker 2>about maybe they're going to change that target or lighting

0:55:32.000 --> 0:55:35.560
<v Speaker 2>up on that target, I think it's tough for him

0:55:35.600 --> 0:55:38.120
<v Speaker 2>to just take too long of a break. Sure you

0:55:38.160 --> 0:55:40.000
<v Speaker 2>can take the break through the summer, Yeah, take this.

0:55:40.400 --> 0:55:43.520
<v Speaker 1>Off, go fishing. They had a Jackson hole his great

0:55:43.520 --> 0:55:46.080
<v Speaker 1>fly fishing there you go, right, I mean he could

0:55:46.160 --> 0:55:47.719
<v Speaker 1>just chill out for a while, all right. So I

0:55:47.719 --> 0:55:51.520
<v Speaker 1>want to throw one curve ball at you. And as

0:55:51.560 --> 0:55:53.719
<v Speaker 1>a West Coast girl, I got to ask you. You're

0:55:53.760 --> 0:55:56.719
<v Speaker 1>on the board for the San Francisco Giants. What was

0:55:56.760 --> 0:55:57.680
<v Speaker 1>that experience like?

0:55:58.040 --> 0:56:02.600
<v Speaker 2>So I was Now, my brother Greg is the control

0:56:02.680 --> 0:56:05.000
<v Speaker 2>person at the Giants. Look, it was a blast. I

0:56:05.040 --> 0:56:09.040
<v Speaker 2>have to say, Uh, the thing that I learned, I

0:56:09.080 --> 0:56:10.759
<v Speaker 2>think I know a little bit about baseball. I don't

0:56:10.800 --> 0:56:17.279
<v Speaker 2>know anything about baseball. People talk about statisticians, they know everything. Yes,

0:56:17.320 --> 0:56:19.520
<v Speaker 2>this guy's gonna move three feet with this picture? Who

0:56:19.520 --> 0:56:21.960
<v Speaker 2>goes up? And so Pretty quickly I realized I don't

0:56:21.960 --> 0:56:25.279
<v Speaker 2>actually know that much about baseball. But I loved it.

0:56:24.920 --> 0:56:26.880
<v Speaker 2>It was a lot of fun. And of course I

0:56:27.000 --> 0:56:30.120
<v Speaker 2>was there as I tease my brother about. You know,

0:56:30.280 --> 0:56:32.320
<v Speaker 2>when I was on the board we won three World Series?

0:56:32.640 --> 0:56:33.080
<v Speaker 2>Have you done?

0:56:33.120 --> 0:56:34.320
<v Speaker 1>What have you done? Right? Exactly?

0:56:34.960 --> 0:56:37.200
<v Speaker 2>He actually knows a lot about baseball and I don't.

0:56:37.400 --> 0:56:40.240
<v Speaker 1>That's very funny. Just goes to show you that breath

0:56:40.239 --> 0:56:43.200
<v Speaker 1>of and depth knowledge doesn't necessarily help you win.

0:56:43.480 --> 0:56:46.960
<v Speaker 2>Whin I think the key was Jenny wasn't really involved

0:56:47.000 --> 0:56:47.560
<v Speaker 2>in making too.

0:56:47.480 --> 0:56:52.000
<v Speaker 1>Many decisions when to bring in the left, we need

0:56:52.040 --> 0:56:56.600
<v Speaker 1>to switch pictures. That wasn't part of your responsibilities, all right,

0:56:56.640 --> 0:56:58.439
<v Speaker 1>So I know I only have you for a little while.

0:56:58.560 --> 0:57:01.200
<v Speaker 1>Let me jump to my favorite question that we ask

0:57:01.320 --> 0:57:04.480
<v Speaker 1>all our guests, starting with tell us what you've been

0:57:04.960 --> 0:57:07.880
<v Speaker 1>keeping yourself entertained with? What are you watching or listening

0:57:07.960 --> 0:57:09.440
<v Speaker 1>to these days.

0:57:10.719 --> 0:57:13.800
<v Speaker 2>I just finished. I'm always way behind on these things,

0:57:14.760 --> 0:57:17.640
<v Speaker 2>So I just finished. I think it's called Dead to Me,

0:57:17.800 --> 0:57:20.600
<v Speaker 2>which is a huff flick seriously, which I thought was

0:57:20.640 --> 0:57:22.320
<v Speaker 2>it's a it's like a dark comedy book.

0:57:22.440 --> 0:57:22.920
<v Speaker 1>Very funny.

0:57:22.960 --> 0:57:26.160
<v Speaker 2>Yeah, very good, but very good. It was funny. Uh.

0:57:26.200 --> 0:57:31.920
<v Speaker 2>And I've been watching a little bit of Manifest, so

0:57:32.000 --> 0:57:32.840
<v Speaker 2>that was one that.

0:57:32.960 --> 0:57:34.880
<v Speaker 1>I've heard about Manifest. I haven't seen it yet.

0:57:34.960 --> 0:57:40.000
<v Speaker 2>Yeah. So anyway, and then you know, I uh, I

0:57:40.040 --> 0:57:43.080
<v Speaker 2>love to watch there's a there's a streaming service called

0:57:43.120 --> 0:57:45.920
<v Speaker 2>Curiosity Stream. Uh huh oh sure, and you know it's

0:57:45.920 --> 0:57:49.880
<v Speaker 2>got great documentaries on science and history and stuff like that.

0:57:49.960 --> 0:57:52.479
<v Speaker 2>So I tend to watch some things. I was trying

0:57:52.520 --> 0:57:57.000
<v Speaker 2>to understand quantum computing and what it does and quantum

0:57:57.160 --> 0:57:59.960
<v Speaker 2>entanglement and because from.

0:57:59.840 --> 0:58:03.560
<v Speaker 1>A entanglement spooky action out of exactly, and so you know,

0:58:03.760 --> 0:58:05.960
<v Speaker 1>Curiosity Stream is one of my favorite has one of

0:58:06.000 --> 0:58:11.720
<v Speaker 1>my favorite astronomy. It's really they do like deep crazy

0:58:11.800 --> 0:58:14.080
<v Speaker 1>stuff and it's you just get lost the Yeah.

0:58:13.960 --> 0:58:16.640
<v Speaker 2>No, exactly. So I love watching that kind of thing.

0:58:16.840 --> 0:58:20.440
<v Speaker 1>Huh really really interesting. Uh I know the answer, but

0:58:20.480 --> 0:58:23.160
<v Speaker 1>I got to ask anyway, tell us about your early

0:58:23.240 --> 0:58:25.480
<v Speaker 1>mentors who helped shape your career.

0:58:25.760 --> 0:58:30.760
<v Speaker 2>Well, my father is, uh, my early mentor and continues

0:58:30.800 --> 0:58:35.440
<v Speaker 2>to be my greatest mentor. Uh. I feel incredibly blessed

0:58:35.440 --> 0:58:38.880
<v Speaker 2>to have them and and I am grateful. Uh. And

0:58:39.000 --> 0:58:41.080
<v Speaker 2>like I said, he's uh he never tells you what

0:58:41.120 --> 0:58:42.880
<v Speaker 2>to do, but he's always a great if you ask,

0:58:43.000 --> 0:58:45.880
<v Speaker 2>he's he's always great at giving you, you know, his opinion.

0:58:46.520 --> 0:58:49.480
<v Speaker 2>Uh and really incredibly thoughtful.

0:58:50.080 --> 0:58:52.120
<v Speaker 1>Huh. Really interesting. Let's talk about books.

0:58:52.160 --> 0:58:54.600
<v Speaker 2>I have to say something about my mom for a second. Okay,

0:58:54.640 --> 0:58:57.240
<v Speaker 2>so you got to understand my mom had seven kids

0:58:57.320 --> 0:58:59.880
<v Speaker 2>and then went back to Stanford medical school. So really

0:59:00.200 --> 0:59:02.800
<v Speaker 2>my dad was building Franklin. She was she was doing

0:59:02.840 --> 0:59:07.160
<v Speaker 2>that and they you know, she's eighty seven. They're amazing.

0:59:07.480 --> 0:59:09.560
<v Speaker 2>And you know, how long was the leadership?

0:59:09.640 --> 0:59:11.400
<v Speaker 1>How long did she practice for? Oh?

0:59:11.400 --> 0:59:15.600
<v Speaker 2>I think she practiced probably you know, twenty five years.

0:59:15.640 --> 0:59:18.680
<v Speaker 1>Wow, after seven kids went to medical school, that's a hell.

0:59:18.800 --> 0:59:20.640
<v Speaker 2>I think she probably decided she needed a reason to

0:59:20.640 --> 0:59:21.280
<v Speaker 2>be out of the house.

0:59:22.520 --> 0:59:25.320
<v Speaker 1>That's very funny. Let's talk about books. What are some

0:59:25.360 --> 0:59:27.560
<v Speaker 1>of your favorites and what are you reading right now?

0:59:28.600 --> 0:59:34.400
<v Speaker 2>I am reading a book on Kissinger right now, but

0:59:34.560 --> 0:59:35.600
<v Speaker 2>I think you know.

0:59:35.760 --> 0:59:38.520
<v Speaker 1>His book or the someone else's biography.

0:59:38.840 --> 0:59:45.480
<v Speaker 2>I'm reading Walter Isaacson's book on Kissinger. I loved his

0:59:45.520 --> 0:59:50.240
<v Speaker 2>book on Steve Jobs, and he's done so. I like

0:59:50.400 --> 0:59:56.160
<v Speaker 2>historical fiction, and I like history books. Probably can follow it.

0:59:56.400 --> 0:59:59.000
<v Speaker 2>I really enjoy his historical fiction books. You once in

0:59:59.040 --> 1:00:01.880
<v Speaker 2>World War One, World War Two. He's a great one

1:00:01.920 --> 1:00:05.919
<v Speaker 2>called It's about the building of cathedrals, Pillars of the Earth.

1:00:05.920 --> 1:00:06.480
<v Speaker 2>I think it is.

1:00:06.600 --> 1:00:10.120
<v Speaker 1>Every one of his books could absolutely be a movie, right,

1:00:10.200 --> 1:00:13.120
<v Speaker 1>I mean they all are like a James Bond online.

1:00:13.320 --> 1:00:19.720
<v Speaker 1>But by the way, if you liked Isaacson's biography on Jobs,

1:00:20.120 --> 1:00:22.480
<v Speaker 1>I'm drawing a blank on his name is on the

1:00:22.480 --> 1:00:24.760
<v Speaker 1>tip of my tongue. Did you see the book on

1:00:24.840 --> 1:00:29.720
<v Speaker 1>the Right Brothers? Oh, David McCullough, Oh yeah, yeah, so fascinating. Good.

1:00:30.880 --> 1:00:32.680
<v Speaker 2>Yeah, he's another one. I'm a big fan.

1:00:32.880 --> 1:00:35.960
<v Speaker 1>Right, Everything he writes it's just amazing, right, It's like

1:00:36.040 --> 1:00:38.600
<v Speaker 1>he was there reporting on it, and one hundred years

1:00:38.600 --> 1:00:42.200
<v Speaker 1>forward exactly, just so much details. Down to our final

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<v Speaker 1>two questions, what sort of advice would you give to

1:00:45.680 --> 1:00:49.040
<v Speaker 1>a recent college graduate who is interested in a career

1:00:49.360 --> 1:00:51.560
<v Speaker 1>in either investment management, or finance.

1:00:52.400 --> 1:00:55.680
<v Speaker 2>You know, I feel like as an industry, we don't

1:00:55.680 --> 1:00:57.760
<v Speaker 2>do a good enough job at selling people and what

1:00:57.800 --> 1:01:00.400
<v Speaker 2>we do. And I tell the story about I have

1:01:00.440 --> 1:01:04.120
<v Speaker 2>five kids and with my daughter I I was talking

1:01:04.120 --> 1:01:05.760
<v Speaker 2>to my daughters and I said, so are you going

1:01:05.800 --> 1:01:08.240
<v Speaker 2>to join me in this industry? And one of my

1:01:08.320 --> 1:01:09.920
<v Speaker 2>daughters said, no, Mom, I want to do something that

1:01:09.960 --> 1:01:13.600
<v Speaker 2>helps people. I'm like, are you kidding me? This industry

1:01:13.680 --> 1:01:17.680
<v Speaker 2>is a great industry to help people. You know, you

1:01:17.720 --> 1:01:21.360
<v Speaker 2>wouldn't have the vaccines that we had without you know,

1:01:21.440 --> 1:01:23.920
<v Speaker 2>the businesses that were out there that were investing and

1:01:24.000 --> 1:01:29.080
<v Speaker 2>trying to, you know, find opportunities. We help people, I

1:01:29.120 --> 1:01:32.040
<v Speaker 2>say it Franklin Templeton, to achieve the most important financial

1:01:32.080 --> 1:01:34.040
<v Speaker 2>goals of their life. And by the way, every goal,

1:01:34.440 --> 1:01:37.600
<v Speaker 2>not every goal. Most goals require some financially.

1:01:37.600 --> 1:01:41.040
<v Speaker 1>Buy a house, retirements, kids, education, down the line.

1:01:41.280 --> 1:01:44.640
<v Speaker 2>Sadly, So, I my first thing is to say, this

1:01:44.720 --> 1:01:46.920
<v Speaker 2>is just a great industry to be in. If you

1:01:46.960 --> 1:01:48.800
<v Speaker 2>want to make a difference and you want to help people.

1:01:49.560 --> 1:01:51.640
<v Speaker 2>You think about some of the stuff on esg. You know,

1:01:51.720 --> 1:01:54.440
<v Speaker 2>the kind of impact investing, those types of things. All

1:01:54.480 --> 1:01:57.800
<v Speaker 2>of those things require money. And so one is it's

1:01:57.800 --> 1:02:02.200
<v Speaker 2>a great industry too, is go in and be just curious,

1:02:02.760 --> 1:02:06.200
<v Speaker 2>ask questions. Read I always, you know, say to people,

1:02:06.280 --> 1:02:08.680
<v Speaker 2>read the CEO's letter in an annual report if you

1:02:08.720 --> 1:02:10.400
<v Speaker 2>want to know what's on your boss's mind, right, because

1:02:10.440 --> 1:02:13.800
<v Speaker 2>they're gonna lay it out there and try to connect

1:02:13.840 --> 1:02:16.600
<v Speaker 2>what you do to the bigger picture of whatever a company.

1:02:16.320 --> 1:02:20.320
<v Speaker 1>Is really interesting. And our final question, what do you

1:02:20.360 --> 1:02:23.200
<v Speaker 1>know about the world of investing today you wish you

1:02:23.280 --> 1:02:26.280
<v Speaker 1>knew thirty five years or so ago when you were

1:02:26.320 --> 1:02:27.440
<v Speaker 1>first starting out.

1:02:28.440 --> 1:02:32.000
<v Speaker 2>Well, I think the tenants that have always been important,

1:02:32.040 --> 1:02:36.280
<v Speaker 2>which we talked about earlier, like diversification, get invested early,

1:02:36.800 --> 1:02:40.280
<v Speaker 2>the value of compounding dollar cost averaging where you just

1:02:40.440 --> 1:02:44.000
<v Speaker 2>keep committing, you know, and investing month after month after month.

1:02:45.320 --> 1:02:48.360
<v Speaker 2>Those things get lost sometimes in the stories, and yet

1:02:48.400 --> 1:02:51.840
<v Speaker 2>they're probably the most important things about investing.

1:02:52.360 --> 1:02:55.640
<v Speaker 1>Really really, really good stuff. Jenny Johnson, thank you so

1:02:55.800 --> 1:02:58.560
<v Speaker 1>much for being so generous with your time. This has

1:02:58.680 --> 1:03:02.800
<v Speaker 1>just been delightful. We have been speaking with Jenny Johnson.

1:03:03.120 --> 1:03:07.440
<v Speaker 1>She is the CEO of Franklin Templeton. If you enjoy

1:03:07.520 --> 1:03:11.080
<v Speaker 1>this conversation, well, be sure and check out any of

1:03:11.120 --> 1:03:15.280
<v Speaker 1>the five hundred other such conversations we've had over the

1:03:15.320 --> 1:03:21.400
<v Speaker 1>past nine years. You can find those at iTunes, Spotify, YouTube,

1:03:21.600 --> 1:03:25.840
<v Speaker 1>wherever you find your favorite podcast. You can sign up

1:03:25.840 --> 1:03:29.360
<v Speaker 1>from my daily reading list at ridults dot com. Follow

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<v Speaker 1>me on Twitter at Ridolts, follow all of the Bloomberg

1:03:32.800 --> 1:03:37.000
<v Speaker 1>Family of podcasts on Twitter at podcast I would be

1:03:37.040 --> 1:03:39.080
<v Speaker 1>remiss if I did not thank the crack team that

1:03:39.120 --> 1:03:43.040
<v Speaker 1>helps put these conversations together each week. Attika of Albron

1:03:43.080 --> 1:03:46.960
<v Speaker 1>is my project manager. Justin Milner is my audio engineer.

1:03:47.280 --> 1:03:51.200
<v Speaker 1>Paris Wald is my producer. Sean Russo is my researcher.

1:03:51.960 --> 1:03:55.360
<v Speaker 1>I'm Barry Ridolts. You've been listening to Masters in Business

1:03:55.800 --> 1:04:00.200
<v Speaker 1>on Bloomberg Radio. Ye