Transcript: Jenny Johnson, Franklin Templeton


The transcript from this week’s, MiB: Jenny Johnson, Franklin Templeton CEO, is below.

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ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, once again, I have an extra, extra special guest. Jenny Johnson is CEO of investment giant Franklin Templeton. They run about a $1.5 trillion. She’s been CEO since February 2020. She’s been with the firm for decades. Just an incredible, insightful conversation about how to build a company, how to grow through acquisitions, how to make sure everybody on your team understands their role, is appreciated, and is acting and performing at the highest levels.

I found this conversation to be absolutely not only insightful and informative but also delightful and I think you will also.

With no further ado my conversation with Franklin Templeton’s CEO, Jenny Johnson.

Jenny Johnson, welcome to Bloomberg.


RITHOLTZ: It’s great to have you. I’ve been looking forward to this for a long time. I’ve been back and forth for a while and then we had the pandemic hit.

Let’s talk a little bit about your background. You joined Franklin Templeton in 1988. Family members helped found the farm, have run it for a long time. And back then it was Frank, was it Franklin Templeton or not yet?

JOHNSON: It was Franklin.

RITHOLTZ: It was just Franklin.

JOHNSON: We acquired Templeton in 1992.


JOHNSON: So I spent a year, my father said to me, “Look, if you’re going to be in the financial services business you should probably work in New York.” And so I spent a year working for Drexel Burnham.

RITHOLTZ: And by the way, that’s tough when you’re a West Coast gal, used to sunshine and nice weather, right?

JOHNSON: Although I was born in New Jersey.

RITHOLTZ: Okay, where in Jersey?

JOHNSON: I was born in Montclair.


JOHNSON: So, and I lived in New Jersey until I was about nine. So I came back and lived in Jersey City and …

RITHOLTZ: Right, so now I remember why we moved to California.

JOHNSON: Hey, there’s some beautiful parts of Jersey.

RITHOLTZ: There are. It’s the weather is really the big problem. It’s hard to beat that, you know, sunshine 300 days a year to say the least. So since we’re talking about weather, aside from the weather, what are the cultural differences like, especially in finance? Because California finance, very different than New York finance culturally.

JOHNSON: Sure, I mean I think – I think, so Franklin’s headquartered in Silicon Valley. I actually think that what influences it more than anything now is the tech culture that’s going on on the West Coast. And it’s kind of funny, if you, and now you see it in New York City, but if you showed up in a meeting in a coat and tie, post the dot-com era and coming into the more recent stuff, you were viewed as sort of the old economy.


JOHNSON: And now we see everybody, you walk around New York City, hardly anybody wears a tie. The vest is the new uniform.

RITHOLTZ: I think the vest is already the …

JOHNSON: They made me pose …

RITHOLTZ: Right? It’s kind of moved to Lululemon pants and button-down shirts is about as dressed up as people used to wear.

JOHNSON: So I don’t think anybody expected the West Coast to lead the East Coast on culture and attire, but I think that’s happened a little bit on the tech. Otherwise, the West Coast, if you were in the financial services business, it was rough life. You were in the office by a lot of people get up at …

RITHOLTZ: 9 a.m. lunch.

JOHNSON: Yeah, exactly.

RITHOLTZ: Right? I used to laugh. But the good news is you finish at one, you could go out surfing.

JOHNSON: Yeah, there you go.

RITHOLTZ: That was always a thing. So you’re at Drexel for a year in New York. You come back to Franklin Templeton. What was your first role at FT?

JOHNSON: Oh gosh, now I’m embarrassed.

RITHOLTZ: Or was it — it was still Franklin? Go ahead.

JOHNSON: I was an executive administrative coordinator.


JOHNSON: So I was working for the COO kind of on special projects.


JOHNSON: And then I moved into, we had a bank at the time, and I moved into running part of the bank. And I got to tell you, we then spun out an auto financing business. And as a CEO today, I have to say that period of my career running the auto finance business was probably the most significant. I also ran our credit card business at the time.

RITHOLTZ: Both difficult businesses, so not easy.

JOHNSON: In learning how to do things as a CEO. One is we were securitizing the assets in the auto loan and selling them off to other asset managers because we weren’t able to buy them ourselves. And I remember being on the phone thinking, as the PMs were asking questions about cash flows and things, I was thinking, you’re asking all the wrong questions about whether this portfolio will perform because it’s things like down payment. There’s the credit score, average credit score, all the things …

RITHOLTZ: Right, what’s the risk, not the …

JOHNSON: Right, exactly.

And so it was really good to kind of learn that side of the business. And then of course as a CEO, doesn’t matter the size of the company, you’re always talking about where to allocate capital. Should you add more to marketing or in collections, right? And those are the same problems for big companies as little companies. And so I always felt like it was great learning experience.

And then the biggest thing in the credit card business in the late 90s or early 90s, those who were great at data and data analytics dominated the industry and essentially put others out of it. And so I became a big fan of data and how predictive it can be.

RITHOLTZ: For all the obvious reasons, right? If you have an edge in data, you have an edge across the whole business line.

JOHNSON: For sure.

RITHOLTZ: So Franklin obviously divests out of the banking business, the credit card business, the auto financing business. What led to that decision? Did you guys just say, we really want to be pure investment management?

JOHNSON: Well, part of it was, I think, regulatory. The requirements for asset managers to have a bank were such that it would inhibit us a bit.

RITHOLTZ: Post S&L crisis, it became much tougher.

JOHNSON: Yes, exactly. And honestly, I think we divested post financial crisis. So once the rules changed, yeah, so we kept it for a long time. But once the rules started changing, it became difficult around things like seeding new funds. Within a year, you couldn’t be more than 10% of the fund. Well, that’s hard to do in our business because people look for a track record.


JOHNSON: So you seed and get a track record. And we just looked at it and said, it’s not material enough to have it because the complications that it causes on our asset management business.

RITHOLTZ: It sounds like it was an easy decision to cut it loose.

JOHNSON: Yes, except that we do have a fiduciary trust, which is a high net worth business. And it’s always nice to have a lending arm when you have a high net worth business.

RITHOLTZ: All right, so we’re going to get into the acquisitions little later but from when you first started as an administrative organizational assistant whatever.

JOHNSON: Chief bottle washer.

RITHOLTZ: Right, right, fetch me some coffee please that sort of and although I would imagine that you still you know, you weren’t the bottom of the totem pole because people knew obviously knew who you were and knew who the family was but from when you first started at was a let-me-get-my-feet-wet sort of role, how has Franklin changed over the ensuing decades?

JOHNSON: Well I have to say when you say you know you’re right you don’t in a business where founders are still involved and you’re a family member, you’re going to be treated a little differently but my father always was adamant you have to work harder than everybody else because people would look at how hard you work and work just a little less like they won’t feel like they have to do more. And I remember my first job was a summer job and I took over for my older sister, who was 21 at the time, and I was, I don’t know, 15 or 16, and he was paying her $5 an hour, and he was paying me $2.50 an hour.

And I said to him, “Look, I think I’m a harder worker “and I think I should get $5 an hour.” And he said, “Well, you can always get a job somewhere else.” (LAUGHTER) So that’s what I learned. Okay, there’s certain standards …

RITHOLTZ: Your dad was no nonsense.

JOHNSON: No nonsense.

RITHOLTZ: He is serious.

JOHNSON: 100%.

RITHOLTZ: You don’t like it here? Hit the bricks.

JOHNSON: Exactly.

RITHOLTZ: All right. That’s really interesting, but by the way, that’s really astute observation people are going to look at how hard you’re going to — you’re working and they think I could work a little less hard.


RITHOLTZ: See I would think they would want to work a little harder than you just so no one accuses them of slacking but maybe it’s a generational thing. Who knows? And we’re not that far, I think we’re about the same age, I was always taught hey find the hardest fastest guy out there and just do a little more than him.

So you don’t want to be on the underside …

JOHNSON: For sure.

RITHOLTZ: You’re going to be passing that.

JOHNSON: For sure.

RITHOLTZ: So were you — in the early days, it was mutual funds it was SMAs, what were you guys doing?

JOHNSON: Well it’s really just mutual funds I mean that’s that was the that was the vehicle of choice and you know, it evolved over time two things like SMAs and ETFs and collective investment trusts, now you have to be able to provide all of those vehicles as outlets for your investment capabilities and I think a lot of that change happened. It was starting to happen but accelerated after the global financial crisis where regulators pushed for more transparency in distribution fees.

And so you saw this shift from kind of fees embedded in say the mutual fund vehicle to being external on the client statement and so then advisors wanted things like ETFs and SMAs and other things because the client was seeing that they were paying their advisor every month.


JOHNSON: And so that’s changed, I think that’s been a dramatic change in the industry on the type of vehicle we use.

RITHOLTZ: I always thought that the marketplace would fix that on its own. And I’ve been wrong about this for decades. I always assumed people would see, oh, a 5% front load on a C-share or a 2 1/2% annual. I assumed people would see that and steer away. But it doesn’t appear that that really happens until the financial crisis. And that seems to be where indexing really took off and where people became a lot more price sensitive.

JOHNSON: Well, I think you were seeing a big shift to C-shares where you had a bigger backend trail and a smaller upfront. So that was happening a bit. And look, I’m a big believer that some of those type commission products are still important. We look in the UK where they have something called RDR.


JOHNSON: So they don’t permit any kind of commission-based selling, and so it’s all gone to fee-based, and you have a huge percentage of population orphaned from advice, because essentially, an advisor says, “Ah, that’s too small of an account. It’s not worth my time.” Whereas if they got that upfront commission, they’d spend the time doing it. And the key is the difference for people investing early.

So if you invest for 10 years from age 25 to 35, say $5,000 a year, or you wait ’til 35 and invest for 30 years at $5,000 a year, you will have more money for those investments over this 10-year period because of the compounding. And so getting people to invest early is really, really important, and you don’t want to have mechanisms, regulatory environments, that kind of prohibit them getting advice early.

RITHOLTZ: That’s interesting, although in today’s digital world, as you guys know, there’s so many ways to invest with no minimum fees and a lot of people, especially of the younger generation, are very comfortable as DIYers, not do-it-yourselfers. Not that Robinhood is how they should be necessarily investing, but hey, it gets them interested in finance, it gets them thinking about money. That’s not a terrible thing.

JOHNSON: No, it’s not a terrible thing. It’s actually great and especially because you can do some basic kind of asset allocation models, so the robo-advisor…


JOHNSON: …can be terrific for somebody who doesn’t have a complicated financial situation.

What you tend to see is as people earn more and have more and more savings, somebody said to me anecdotally, if you have sort of three years’ worth of savings of your income, that’s when you start to look for advice. Because you realize, you know what, this is more complicated. I’d rather have somebody who’s full-time focused on this than me as a part-time person managing my money.

RITHOLTZ: I just have to share a funny story. We just got back from vacation, not terribly long, but eight or nine days, and you come back to all this mail and it’s, oh, here’s the IRS state, the pass-through, I got to forward that to the accountant, oh, and here’s a disclosure about this fund we have, and then here’s the quarterly thing coming up, and all of a sudden, in a rush, I figured out, oh, this is why people pay a fee for someone to give them advice. I don’t want to deal with it.


RITHOLTZ: I’m like relaxed, I’m back from vacation. The last thing I want to do is start thinking about New York State PTET pass through. Just take this off. What is it going to cost? Great, get this off my plate. I don’t want to deal with it.

JOHNSON: Well, and I think a lot of people, when like TurboTax came out, they said, “Oh, this is going to be the end of the CPA.” Who are the number one users of TurboTax? It’s the CPAs.


JOHNSON: Because in the end, people sit there and say, “Wait a second, actually, the more money people have, the more they have options to do other things.”


JOHNSON: And they think the opportunity cost of spending their time trying to manage those things is not worth it.

RITHOLTZ: It’s the time. It’s the time. The time is crucial. Plus, the rules change every year. Who wants to have to stay current with that? I find it’s just like, you know what, and it’s funny, this is like a later in life realization. When you’re young and have all the time in the world and not a lot of money, I could figure this out. I could do my own taxes. And then when you’re old, it’s like, whatever it costs.

JOHNSON: Just do it.

RITHOLTZ: Get this junk away from me.

JOHNSON: Exactly.

RITHOLTZ: So let’s talk a little bit about the history of acquisitions at Franklin Templeton. Just about 30 years ago, Franklin acquired Templeton, Galbraith, and Hansberger. That new name of the company became Franklin Templeton. So it was Franklin, along with mutual fund pioneer Sir John Templeton. You were kind of young in the firm in ’92 when this took place. What do you recall from that fairly substantial, back then, a billion dollar acquisition was not nothing.

JOHNSON: No, it was huge.

And it was interesting because a lot of people, we sort of came into that late as far as one of the potential acquirers. So, we basically viewed it as, Franklin was very strong in fixed income, domestic equity, and what Templeton did was open up this international investing, which was really pretty new…

RITHOLTZ: Right. Early.

JOHNSON: …for most assets. Yeah, they were pioneers in emerging markets and really kind of global equity. And when we acquired it, a lot of people were skeptical because asset management acquisitions don’t always work.

RITHOLTZ: Right, big cultural …

JOHNSON: And it seemed expensive, big cultural difference, and it was expensive.


JOHNSON: And I have to say that my dad understood, and it’s been our philosophy throughout all our acquisitions in the asset management business, what are you buying? You’re buying people, their investment capability, and their investment process, so don’t destroy value by going in and messing with it. So we really left it standalone on the investment side and then integrated the rest of the firm. And that worked out really well.

RITHOLTZ: That’s so different of an approach than we typically hear, which is we want to buy a company for the assets, the revenue stream, maybe some technology or intellectual property, and we’re going to just mash you into our culture, whether you like it or not. That seems like a little more nuanced approach that your dad took.

I don’t see a lot of other mergers in the finance space that are that hands-off. Maybe the big acquisition of PIMCO 20 years ago was maybe a little too much hands-off, but for the most part it seems like everybody just mashes everybody together.

JOHNSON: Yeah, I mean, in our case, I wouldn’t say it’s totally hands-off. It’s hands-off on the investment process, right? And really trying to integrate the rest of it and then trying to figure out ways that you can add value because you have scale so that these firms don’t have. That was less of an issue in the Templeton deal but with our more recent acquisitions that’s been really important.

What can we do, because we’re bigger, that can enhance the various investment teams?

RITHOLTZ: So let’s talk about some of those more recent acquisitions. 2020, you buy Legg Mason. I think it was an all-cash deal, $4.5 billion, is that about right?

JOHNSON: Yeah, and then we took on some debt.

RITHOLTZ: Yep. What was the thinking that, what did Legg Mason bring that you guys needed or didn’t have?

JOHNSON: Yeah, so in the case of Legg, they had Western Asset Management, which is core plus fixed income, which is the largest category, and we just didn’t have scale there, and you have to have scale to be in the institutional space. And the other big one that was exciting for us was Clarion Partners, which now is an $82 billion, I think they were probably 45 at the time, $45 billion, real estate manager. And we knew that we wanted to get into alternative space. And so getting that as part of the Legg deal was really exciting.

And then unbelievable managers in ClearBridge and Martin Currie and Brandywine. And so we just got great expertise there. They were 75% institutional. We were 75% retail. So bringing the two firms together, you really made us 50/50 retail and institutional, and that’s been very important.

RITHOLTZ: And then this year you acquire Putnam for almost $1 billion. Putnam almost the purchaser of Templeton, which is kind of amusing that everybody ended up in the same place. That seems to be a very strategic purchase. Tell us the thinking behind acquiring Putnam.

JOHNSON: So let me step back and just say sort of what our strategy is in acquisitions. So we’ve done, I think, 10 in the last, Putnam will be our 10th in the last three years. And they’ve all been focused on, if you think about the big macro trends going on in the industry, one is private markets are here to stay. And they’re here to stay, one, take private credit. Right? The banking crisis of the global financial crisis had regulators change the capital requirements for banks, banks preserve their capital for their best clients, and it created this opportunity for basically private credit outside the banking system.

And honestly, with the discussion around, which I have strong opinions on, discussion around more capital requirements post the regional banking crisis, I think that’s only going to get worse. And then you …

RITHOLTZ: And that’s going to create opportunities for firms that are filling that void.

JOHNSON: Exactly.

RITHOLTZ: And by the way, this really began in the late ’90s, early 2000s. As the big banks moved upscale, they left a void underneath and private markets stepped right in.

JOHNSON: That’s exactly right.

And then the other piece of that, And this was definitely fueled by low interest rates, but private equity, the fact is, companies can stay private longer. And you see that in the numbers, right? 2000 average company went public after three years, that was probably an anomaly in the dot com.


JOHNSON: By 2019, it was, I think, nine to 10 years, and by 2022, it was 14 to 15 years before they were going public, right? You have half the number of public companies that you had in 2000. And so you look at, well, why go public, right? A public company has quarterly earnings pressure. There’s a lot of scrutiny around compensation of the staff.


JOHNSON: There’s an expectation on political. You’re going to opine on certain political issues. If you’re a private company, you don’t have any of those pressures.


JOHNSON: And in a time of great technological advances, you need to invest for things. I mean, some of the stuff we’re doing in the blockchain space won’t be material to the firm for seven to ten years, but we think it’s really important that we’re doing it now.

RITHOLTZ: But if you’re a private company, if you’re a public company shareholders are going to give you grief about that sort of …

JOHNSON: If it’s impacting your quarterly earnings, we’re fortunate in that we still have founders and employees in management that have a significant amount of the stock so we can sort of withstand some of that pressure, but if your stock’s underperforming you can always get an activist in who’s looking short-term to capture the benefit and say we’ll be worth more if we break all this up.

RITHOLTZ: That doesn’t build a long-term sustainable company, but that’s the type of pressure that public companies have.

And so we believe that trend is here to stay, and we knew that we needed to add those capabilities. So our one, I say there’s three areas that we look for in acquisition. So one is filling product gaps, particularly in the case of private markets.

The second is, the second big trend was when the financial crisis happened, and you had, we mentioned the regulators made, put pressure on to have transparency around distribution fees and advisors became fee-based, that honestly pushed much of the power to the distributor.

And honestly, actually to the person who deals directly with the client, to the financial advisor themselves.


JOHNSON: And so, and the manufacturer had less power. And so we look for ways that we can build greater strength in distribution as being a better strategic partner. Some of that’s FinTech, in the case of the Putnam, it’s building a closer relationship with Power Corp who has, you know, who owns both Great West Life Insurance or significant control of it, as well as Empower, the second-largest retirement platform, fastest growing one, and that’s really important because the retirement channel is where mutual funds still have growth.

RITHOLTZ: Right, because there’s no reason to put an ETF there.

JOHNSON: Exactly, the tax…

RITHOLTZ: The negative on a mutual fund is phantom taxes. Hey, if it’s a qualified account, It doesn’t matter, it’s irrelevant.

JOHNSON: Exactly.

RITHOLTZ: And there are advantages to mutual funds …

JOHNSON: For sure.

RITHOLTZ: …in terms of trading and management that give it a leg up over ETFs, especially in that sort of environment.

JOHNSON: Absolutely.

RITHOLTZ: So I want to talk about the 40% and a little bit of insulation from public markets, but I’m going to circle back to that. I got to ask you about one last acquisition. Last year, you purchased O’Shaughnessy Investments, including their direct indexing product called Canvas. Full disclosure, we’re one of the early users of Canvas. I think my firm, Ritholtz Wealth Management, is the largest, or at least was when you acquired it, the largest client of Canvas. We love the product and our clients have found it to be tremendously useful in terms of managing and offsetting capital gain taxes.

What was the thinking behind the O’Shaughnessy acquisition and what are the plans for Canvas?

JOHNSON: Fantastic. I mean, you probably could, having, being a user of it, you probably could even speak to this more than I can, but I can tell you, we think, again, a big trend is this direct indexing. But the reason we love Canvas, and I know you know this, is Canvas grew out of a quant shop that built the technology to manage their quant portfolio. And so, initially, you just have direct indexing with tax optimization, but we look at it as a tool where we think you can take, just like the trend towards SMA, Separately Managed Accounts, you can use the technology of Canvas, express our active management strategies in there. So take a mutual fund strategy, deliver it through the Canvas platform, overlay with tax optimization, and even include some ESG overlay.


JOHNSON: So if you have a client who says, I really want to, my daughter will say, I really want things that are pushing towards net-zero on carbon. So she wants her portfolio managed that way. You can put those tags in there but still take a professionally managed strategy…


JOHNSON: And express it through that technology. So we looked at that and said this is going to be really significant in the future. We have to be in the direct index space but more importantly we have to have great technology because we think this is just the beginning of a trend.

RITHOLTZ: Right. Not only is the software really good but the O’Shaughnessy database that they’ve been polishing up for decades. Very few things. I mean CRISPR is probably the only other one that is that focused, that dedicated, that clean.

Most databases are just problematic to do this sort of work. Jim is now retired, but I know his son Patrick took over. But it’s a great product. They’re a great team. I’m sure you guys are going to have a lot of success with them.

Let me go over couple of more acquisitions that really kind of surprised me. Managed options capabilities, tell us about that.

JOHNSON: Well we think that’s going to be important to add to the Canvas platform.

RITHOLTZ: Oh really?

JOHNSON: Yeah so managed options are important as part of the tax optimization strategy and so the feeling is that you needed that to be included to where the technology will ultimately go for this where the strategies will ultimately go.

RITHOLTZ: So when I hear managed options and capital gains I think zero cost collars and things like that is that what’s along the lines here?

JOHNSON: Yes so they can include that now in like a separately managed account.

RITHOLTZ: Oh that’s really, really interesting.

And then Alcentra you acquired from BNY Mellon, Lexington Partners who’s another private equity and secondary entity and then I didn’t realize you guys bought AdvisorEngine. That was like a big sort of semi-robo advisor for advisors. I mean this is a long line and then Alternative Credit Manager, Benefit Street Partners and then Athena Capital. I mean you guys have been on a tear. All of these things are different products filling in holes different services, and you want to be able to offer a full rounded set of products to institutional and retail clients.

JOHNSON: Yes, we want to be the first phone call. We want to be the strategic partner where, you know, somebody’s thinking, I’ve got this problem. Let me think about how to solve it.

I want to talk to Franklin Templeton and talk to them about how to approach it. And so, you take Advisor Engine, it has a CRM system that was built by a financial advisor. So, you know, a lot of smaller RIA’s don’t have a tech team to sit there and say, how do I use Salesforce, how do I use Microsoft Dynamic? And so they want something simple. So this is a simple CRM system that’s just for the business of being a financial advisor.

And if we can build that relationship with that advisor, then we feel like we can be a stickier partner.

RITHOLTZ: How important is the registered investment advisor, the RIA space to Franklin Templeton.

I always thought of you guys back in the day as mutual fund managers, perhaps selling into that vertical, I sound like a marketing guy, but how important is the RIA space to Franklin Templeton today?

JOHNSON: Well, the RIA’s have been growing again as the fee-based environment and the fact that people honestly could take their book and walk in and set up their own shingle and be on a platform provider.

And so it’s a really important channel for us. It’s a, we are much bigger in the wire house and the independent channels, because that’s kind of been our DNA historically. And those who were big in the ETF tended, RIA’s have tended to lean more towards ETFs, although that’s a little bit of a stereotype.

And so it’s been an important area of focus for us to grow that channel.

RITHOLTZ: And to be fair, the wire houses have kind of been slowly morphing into advisors. They’re all hybrids these days. It’s less transactional, more fee-based to the benefit of the clients.

JOHNSON: Absolutely. Couldn’t agree more.

RITHOLTZ: Really quite fascinating. Let’s talk a little bit about your experience as a woman running a corporation. You’ve held leadership roles across just about every line of business in the company. What was that experience like? What did you learn from running things as diverse as investment management and technology?

It seems like totally opposite businesses.

JOHNSON: It’s funny, so on the first question, people ask me, what’s it like to be a woman in finance? Well, the problem is I don’t know what it’s like not to be one, so I don’t know that …


JOHNSON: …I have a good answer to that, but I can say, I am so thankful today as a CEO to have having run technology because so much, I think, of decisions that we have to make and innovation that’s happening requires a basic understanding of technology.

And so I look at parts of your career, you sort of move your way around and you wonder whether it’s going to be relevant at some point or not. And some of the things that I think would, naturally people think wouldn’t be relevant to being CEO have been the most relevant. I mentioned running the auto finance business …


JOHNSON: And honestly running the technology department.

RITHOLTZ: You don’t have a background in tech. How hard was it to ramp up running a tech division when you’re not a natural geek? And it’s almost a different language sometimes.

JOHNSON: So it’s funny, although I’m divorced now, but I was married to a guy who was a tech person. And I’d always ask him all these questions. I was really curious around it. And so I always felt like he gave me a really good background in understanding technology. And then I learned to be fearless in asking the question. Right? Tech people are used to everybody’s being so afraid of tech that they give you, they can sometimes give you a little bit of a blurred answer.

RITHOLTZ: They can steamroll you a little bit.

JOHNSON: And you’re afraid to look stupid so you don’t ask. Well, I learned, you know what, if you think about what technology is, it’s moving this piece of data from here to here and maybe adding some new data, dumb down what you’re talking about and let me just try to understand it. and things like cloud servicing, right? These are concepts that have existed in tech for a long time. The technology gets better, and we usually change the name about every decade. But once you understand what it’s trying to achieve, you don’t have to be a programmer. You just, you know, and I honestly, I think one of the biggest things that people don’t appreciate is the quality of data. Truly garbage in, garbage out. And so having discipline around your data management is really, really important in a tech department.

RITHOLTZ: It’s really hard also. we were talking earlier about the O’Shaughnessy database. I know that they painstakingly triple check and quadruple check stuff, because you don’t want an errant thing in there that will change the outcome of a backtest or a model.

JOHNSON: For sure, and I think actually, we all talk about AI and AI understanding and the models that you use and the combination of models is going to be really important, but honestly, I think the real competitive advantage is going to be, and this is why I think scale in asset management is so important, is the breadth and depth of the database.

So we have an investment data lake that is shared by our 18 individual investment teams. And so, you know, as they contribute, so maybe a team like our Global Macro team has 14 different feeds for its ESG framework. They come in, it scrubs centrally. Now that data is available to the other teams, right? And we think over time, it’s going to be more about what unique data do you have that you can apply your models, it’s going to be more and more important.

RITHOLTZ: So let’s talk a little bit about your leadership experience. Your timing was impeccable. You step into the CEO role February 2020. Thank goodness nothing was about to happen over the next three years. What was it like a month into the new gig and suddenly the world shuts down?

JOHNSON: Yeah, well, so I stepped in, I think February 11th, I think February 20th, we announced the acquisition of Legg Mason, which of course had been in the works …


JOHNSON: For quite a while, so we had good plans in place, and then about three weeks later, remember, we were going to flatten the curve with two weeks off …

RITHOLTZ: Yeah, that’s right.

JOHNSON: And it turned into two years.

RITHOLTZ: It’s just going to be — that was transitory, right?

JOHNSON: Yeah, that was transitory.

You know, you just deal with the cards that are in front of you, and the good news was, when I was running technology, I became very passionate because we had developers in India and kind of around the world, Poland and various places. And I felt like it was really important that you could see people when English was a second language. And so we pushed, I pushed the tech team to get desktop video. And so we had these devices, they were called a Tandberg device, and it sat separately on your desktop and we would do video calls. And so the company had been doing this for 20 years.

RITHOLTZ: Zoom before Zoom.

JOHNSON: Yeah, exactly. And so we were comfortable. It was already part of our DNA to have meetings where inevitably somebody was on video. So it was already kind of how we operated. Now you had everybody on video.


JOHNSON: And I think the thing that I appreciated was actually people finally believed you can run businesses that way. And so in many ways we closed the Legg Mason deal two months early. And I think it was because we were in some ways more efficient by doing it via video, not everybody getting on an airplane and going and trying to work your calendars to go meet.

RITHOLTZ: You know, the crazy unexpected benefit of the new post 9/11 rules was that everybody had to have backup systems. You couldn’t just have everything in one location. I think the SEC promulgated those. And when people were suddenly forced to work from home, it was very easy to get, or relatively easy to get up and running, just an unexpected side effect of the new regulations that came in after we lost the Twin Towers.

It’s who knew that the SEC can actually be so forward-looking, and hey, you know, it all worked out. We were all able to get up and running.

JOHNSON: Yes, for sure.

RITHOLTZ: So were there any complications from all this remote work in your CEO transition, or you were in place when everything hit the fan and it was just a matter of tacking into the wind when the world changed?

JOHNSON: Yes, I mean, I wouldn’t attribute anything in particular to that, I mean, when you do an acquisition, one of the most important things you do is assess talent and there’s a bias towards your own talent and it’s a missed opportunity if you don’t infuse your organization with talent from the company you acquired. And so we were very focused on that. And sure, you’d love to meet people in person versus doing Zoom interviews …


JOHNSON: But we had to do it that way. We ended up with, I think, two thirds of Legg Mason’s corporate services groups came into Franklin Templeton and a big part of the distribution team became part of Franklin Templeton.

So you’re trying to kind of build a best athlete. And it’s not just a best athlete, it’s the best team. So sometimes you’re just trying to make sure the team will coalesce. And I think we did a pretty good job of that.

RITHOLTZ: Really interesting. You mentioned your dad. Let’s talk about some leadership lessons. What did your father teach you about managing people, running a company, and getting all of the horses pulling the cart in the same direction?

JOHNSON: I mean, one of the things that my father has always said, “Take care of the client, “the business takes care of itself.” And so anytime there’d be, and I still talk to him about things, you know…

RITHOLTZ: Your dad is how old now?

JOHNSON: He just turned 90 in January.

RITHOLTZ: And sharp as a tack, right?

JOHNSON: Absolutely.

RITHOLTZ: That’s really, you got some good genes here that you’re dealing with.

JOHNSON: Yeah, he’s amazing. And so, you know, if you think about that and you overlay that in any decision, is this good for the client? Then I think that gives you a lot of clarity. It’s kind of a North Star there.

And then I’d say my dad is, you know, who’s always incredibly fair to people, and he recognized that every person contributes to who we are as a company. When your call center employee picks up the phone and is talking to a client, they’re shouldering the entire reputation of the firm on them with that client.

And my dad always understood that, and so there’s just a genuine respect for everybody’s contribution to the company. And I think that’s part of our culture.

RITHOLTZ: That’s really interesting.

You mentioned you took a slot from your sister when you first started at an entry level. I know one of your brothers was very involved with the firm. What’s it like dealing with people that you have this familial personal relationship? How do you manage around that? I would think that’s, I’m just thinking about my own siblings and we would have killed each other and gone bankrupt long ago.

JOHNSON: Everybody asks me, is this succession? No, not in our family.

RITHOLTZ: I wasn’t even thinking about that. I’m just talking about my own family and I know there would have been bloodshed, but how do you navigate that? It sounds challenging.

JOHNSON: There were definitely times where I’d say to my brother, “Listen, stop. You can’t treat me like your little sister in a meeting.”

RITHOLTZ: Right. In front of other people.

JOHNSON: In front of other people, right. But you know what? As a family, we get along great and my brother and I get along great and he’s still Executive Chairman today. And we talk about parts of the business, things that I’m struggling with. I’ll talk to him, I’ll talk to my dad. And I got to tell you what a great privilege it is to be a CEO and have people who care so much like you do to be able to talk to about things that you’re thinking about.

RITHOLTZ: You go to them for advice all the time?

JOHNSON: We’ll talk about, before any acquisition is done, that’s clearly part of the conversation, as well as my uncle. My uncle’s still active in the firm, and so we’ll have conversations about what we think. Does it make sense? And you know, it’s just my father, my uncle, my brother will never say, “You have to do this.” They’ll say, “Hear the thinking on it.” And my brother would say the same thing when he was CEO for 15 years. My father was a great resource, but never would tell you what to do.

RITHOLTZ: Really interesting.

JOHNSON: And so it’s nice to have those voices in the room, but in the end, the decision’s mine as a CEO with my board and my management team. And they’re just great advisors.

RITHOLTZ: That’s great. I love the stock symbol, BEN.

JOHNSON: Yeah, me too.

RITHOLTZ: I mean, so great. You talked earlier about long-termism versus short-termism. The family still owns like 40% of the outstanding shares.


RITHOLTZ: Does that insulate you from the sort of short-term activist, what about this quarter’s returns when you’re making those long-term investments in technology? How does that affect how you navigate?

JOHNSON: Yeah, no, I mean for sure you’re you the risk in asset management is that an activist comes in and says you know what why don’t we spin off all these groups as we can get a bigger multiple for the alts business and you know various things and that is a short-term gain right and doesn’t build a long sustainable business, so it’s better to have that you know for — and I genuinely believe scale is going to be more and more important as I mentioned for things like data for asset managers and so building a long-term business is really important.

An activist doesn’t take on a company that’s got a 40% you know control because you can’t get enough stock to be able to ultimately you know …

RITHOLTZ: Right there’s 90% of the remaining 60, it’s — so that does create a little bit of a buffer so you guys can think very long-term make acquisitions and make investments.


RITHOLTZ: which other publicly traded companies might not have that luxury.

JOHNSON: Right and we are totally aligned with the shareholders because we’re looking for the best outcome for the stock and again, sometimes that’s making some investments today that you know pay off in a few years.

RITHOLTZ: So, this is a ridiculous question but tell us about your next acquisition meaning I don’t expect you to say we’re going to pay X for this like what areas do you think are interesting where are you looking to say, “Hey, we can acquire some talent and some technology in this space?”

JOHNSON: So that with respect to kind of product gaps the only one that we really feel is out there as a gap is infrastructure. So if — interesting because we think there’s going to be a lot of growth on the infrastructure.

RITHOLTZ: On the bond side or on the equity side?

JOHNSON: Probably equity but because we can do the on the private credit teams they can do it on the on the bond side, but it would be — that would be an area that would be interesting to us. We like local asset management. So you know we have clients in 155 countries. People tend to like home, they have a home country bias.


JOHNSON: So you know 80% flows in India tend to go to domestic products. We were the first foreign manager in India and so we have local equity, local fixed income but we look for markets that made sense to us. We’d be a buyer of a local asset management. We have them spattered throughout the world. And then as I mentioned on the distribution side, anything that builds that deeper relationship that can help us with distribution.

RITHOLTZ: So I don’t want to talk about politics. I want to talk about culture and environment. We’re recording this. We have President Modi here in the U.S. India seems to be like a perennial next economic powerhouse after China and it just always seems to be not catching that next bid. When you look at a region like that, and I don’t want to just talk about India, but if you’re looking at India, or you’re looking at China, or you’re looking at Taiwan, or Singapore, or Korea, or Vietnam, how do you think about building a presence in a place like that and developing a relationship, either building or acquiring a local entity?

Because how do you pick let’s focus on this region over that region? It seems like it changes from week to week, month to month.

JOHNSON: It’s going to matter the demographics of a country, the growth, the policies, the regulation, all those that go into the factors. I mean we were in India in 1995, we were in Taiwan in 1985, China first investments in 1988.

So you know we look at those, Asia’s going to be, they say there’s going to be a billion people who enter the middle class in the next decade and 87% of them are going to be in Asia. I lived in India for a little while when I was running the technology and operations group and I can tell you 56% of the population is under the age of 25. It’s got a British legal system, a British education system, you know, while there’s 23 different languages that are spoken and more dialects…

RITHOLTZ: Everybody speaks English.

JOHNSON: You know, certainly you aspire to speak English, and so the people that you hire from colleges are all English speaking, so those are all great tailwinds for the economy. Many people say, you know, India grows at night when the government sleeps. I think Modi’s been doing a really terrific job at, you know, trying to, you know, reduce the amount of kind of bureaucracy that’s there.

I have to say that my observation, when I would be excited by all those statistics, Indians were the most skeptical about India. On my last trip it was a clear difference in view that in India — Indians and Indian Americans are really excited about what’s going on.


JOHNSON: And the first time I found an optimism there that I hadn’t really sensed before.

RITHOLTZ: That’s so interesting because that’s what I meant by they’re perennially about to happen like they can very easily be on par with China in terms of their economic prowess, more along the lines on technology and software and other areas where clearly there’s a huge, huge infrastructure there, and it just seems to like always be about to happen and never happens.

JOHNSON: Well, you know, they say there’s six times the number of engineers that graduate in India every year than the US and I can tell you, you know, an Indian would prefer to go to an IIT than Harvard. They look at Harvard as a safety school.


JOHNSON: I mean really and so …

RITHOLTZ: MIT though is really still very difficult.

JOHNSON: (LAUGHTER) But the IITs are pretty phenomenal, right?

RITHOLTZ: And we end up, you know, importing a decent number of engineers from the best Indian schools. Is that still going on the way it used to?

JOHNSON: Well I think a lot of them are deciding that there’s more opportunity even at It used to be they had to come to the US or Europe because that was going to be where the opportunity is.


JOHNSON: But now the domestic economy is growing so well that there’s a lot of excitement. So there’s less that are choosing to leave. And then I think China, a lot of discussion around China. China’s, what’s the US? 23% of world’s GDP and China’s 18%. The third is like Japan at 4.9.


JOHNSON: I mean, it’s a big market and it’s going to be important. And so, you know, we have a joint venture there, and we continue to, you know, invest in China.

But then there’s other markets, you know, that you look at. There are 300 million people in Indonesia. If they get their policies right, it’s going to be amazing growth. Vietnam, you know, another one. Capital markets are really tough there, but, you know, it should be a great opportunity in growth. And you see some of the supply chains people are diversifying. India is one of the beneficiaries of that. Vietnam’s another beneficiary of that. Japan even in the case of semiconductors.

So I think there’s just a lot going on there that is pretty interesting.

And then the Middle East is another amazing area.

RITHOLTZ: Yes, they seem to be purposefully trying to morph their reliance away from crude oil and energy towards more modern technologies. How can you even think about making an investment in the Middle East on anything other than oil? That’s no longer the case, right?

JOHNSON: Right, I mean I think what’s interesting is they think like a generational family thinks, right? And so in their mind, oil runs out, I don’t know, three generations, whatever it is, they want to reinvest in their economies to diversify it, to ensure that they’re not out of money when that happens, right?

And I actually genuinely believe some of the greatest innovation on renewable energy is going to come out of places like Abu Dhabi and Saudi Arabia because they are investing in it and they have the balance sheet to be able to make those investments.

RITHOLTZ: And keep in mind, oil isn’t going to go away. It’s just going to go away as an energy source, as a material science source. It’s enormous. The old joke used to be, the Arab sheik says to the American businessmen, “We’re selling you all this oil. We can’t believe you guys burned this. You know what it’s really good for. You can make it into a million different things.” And that’s the future of oil, not energy, but materials. So you have confidence in what’s going to take place in the Middle East. How does one invest into that region? If you’re a retail investor, “Hey, I like the idea of India, I could go buy an ETF. I like the idea of Middle East, how do I invest in that?”

JOHNSON: Well, I think you got to spend a little time there and go see because I took my executive committee to the Middle East. We visited several countries there. And honestly, I think that many of them felt that we were going there to think about raising money from that region and came away thinking there are going to be investment opportunities there.

We actually acquired in 2007 a local asset management. I mentioned local asset management being important. So a local asset management team that’s based, we’ve been in Dubai about 20 years, and we’re the largest, I think, multinational Sharia manager for Islamic finance, that came out of that local team. And so they do local GCC bonds and equity investments. So there’s a lot of opportunity, I think, to invest there.

RITHOLTZ: Really quite fascinating.

So let’s talk a little bit about what’s going on in the world today. We’ve seen this massive change in rate regimes. How does that affect your ability to run the firm? And how does it affect fund managers dealing with this sudden 500 basis point increase in rates.

JOHNSON: Well, I think the good news is that fixed income is now actually an asset class you want to be in and you can get returns.

RITHOLTZ: Hey, look, we get yield.

JOHNSON: Isn’t that exciting?


JOHNSON: We get yield, exactly.

RITHOLTZ: Exciting.
JOHNSON: And so, I think that’s terrific, right? And then the other thing is volatility is good for active managers, right? It shows whether you have skill and we’ve come off a decade where basically government’s been pumping money into the system. If you didn’t have access to private markets, you couldn’t make any money in fixed income, so where’d you go? You went into equities. It just exploded equities up and …

RITHOLTZ: What was that, 2010 to 2020? 14, 15% a year?

JOHNSON: Exactly.

RITHOLTZ: That’s double normal.

JOHNSON: But it was hard. If you are an active manager, your job is to have a diversified portfolio and think about risk-adjusted returns.


JOHNSON: And when you have a momentum market like that and you have five companies that take 25% of the index or whatever it ended up being, a professional manager gets nervous by that type of concentration, say the S&P 500. And there’s not enough discussion about how the indexes, the market risk of the index changes depending on one, the day Tesla was added to the S&P 500…


JOHNSON: It became a much riskier investment by investing the S&P 500 based on volatility and concentration. And so in those types of market, It’s hard for an active manager to actually beat that, but when you have volatility, that’s when you start to see outperformance.

RITHOLTZ: So let’s talk about money market funds. Not only are you seeing some yield on fixed income products, money market funds used to yield nothing. Now you’re actually seeing some returns, even though there’s been some concerns about some of the regulation around money market funds the problem we had in the financial crisis.

What is Franklin Templeton doing in this space?

JOHNSON: Well first of all I don’t think money market funds look anything like they did when you had problems and you just had a couple of …

RITHOLTZ: Huge difference. Right? Huge difference.

JOHNSON: Huge difference. And so you know there’s — if you have a certain amount of risk and you’re a prime floating fund otherwise you’re you know tied to the dollar and it’s short duration and you know I think very secure and you know today you can get 5.5% percent in the money market fund, I mean that’s pretty impressive.

RITHOLTZ: Right. Real money.

JOHNSON: And I think that we’ve seen a lot of money flow into money market funds because people saw that they could get that and they weren’t ready to get back into the market now. Having said that we’re close to the end of the cycle you know …

RITHOLTZ: Into the rate hike.

JOHNSON: The rate hike…

RITHOLTZ: Right, okay.

JOHNSON: You know I think the Fed is saying they’re going to still raise more and I think you could see one to two more times that they raise this year.


JOHNSON: I think people are finally over the they’re going to cut this year. I definitely don’t think they’re going to cut this year.

RITHOLTZ: Those were the same people by the way who have been forecasting a recession for the past 18 months. So of course they think the feds going to cut. What I find fascinating about the whole Fed investor community thing is that Jay Powell keeps saying this is what I’m going to do and nobody ignores him. Right? I mean go back 20 years you had no idea what the Fed was doing, he’s telling you, nobody wants to believe him.

JOHNSON: You know why a huge percentage of fixed income managers have only lived through the time that the Fed bailed us out every time.


JOHNSON: Right and so they’ve been in that and so they believe that that’s going to be the response whereas people that have a little more experience like me, you.


JOHNSON: we know that you can’t always you know count on the Fed to bail you out and as a matter of fact, Jay Powell is trying to be very clear with it and the market keeps fighting the Fed and thinking they’re going to call us bluff or something.


JOHNSON: I think that the Fed is being very data-driven at this point and he’s trying to make it clear that if the economy still remains pretty hot, he’s going to raise rates further.

RITHOLTZ: Here’s a crazy stat that someone shared with me. If you were born after 1980 and you work in finance, you don’t know what it was like when we had no idea what the Fed — I remember we used to look at the flow of funds report to try and tease out what might happen. Now the Fed says, “We’re going to do this,” and then they go out and do it.

I’m born before 1980, so this is all new to me. But imagine spending your whole career where, “Of course we’re going to get bailed out by the Fed if that happens.” How do you recover from that as a professional if you’ve never experienced wild market, I guess that isn’t true because you have experienced wild market volatility, just the cavalry has always come to the rescue.

JOHNSON: That’s right. I think that’s right.

And I don’t think that, you know, I don’t think that the Fed is going to, as I said, I think the Fed is going to be very data-driven and right now, you know, unemployment is still, what is it, 3.7?

RITHOLTZ: Very low, right, historically low levels.

JOHNSON: You’re starting to see some labor participation coming back in a little bit. You know, look at, a lot of people say, is there going to be a recession or not? Look, there probably is.

RITHOLTZ: Eventually.

JOHNSON: They have to, right? I mean, they have to cool it down. The question is, is it a deep recession that causes a lot of, we don’t think, or at least I don’t think, and by the way, we have five different fixed income teams at Franklin Templeton, so there are some different views on this, but that we’ll have a deep recession.

But the Fed has definitely jammed on the brakes, and it’s still been hard. The easy part was getting inflation from nine to five, four and a half, now’s the real challenge.

RITHOLTZ: So last PPI that came out had a three handle on it. CPI usually follows PPI. Jay Powell can put a flag in the ground, declare victory, take a long vacation. He’s already won, right?

Am I oversimplifying that too much or can he just say, “All right, I’m taking the summer off”?

JOHNSON: Well, I think the challenge for him is that they’ve been very vocal about the 2% target.

RITHOLTZ: Which is a little weird because 2% target was post-9/11, post-financial crisis, post-pandemic, rates were at zero and two percent was the upside target, maybe that target should be rethought, maybe three percent makes sense.

JOHNSON: So until we start to hear the Fed start talking about maybe they’re going to change that target or lighten up on that target, I think it’s tough for him to just take too long of a break. Sure, he can take the break through the summer.

RITHOLTZ: Yeah, take the summer off. Go fishing. They go to Jackson Hole. There’s great fly fishing up there.

JOHNSON: There you go.

RITHOLTZ: Right? I mean, he could just chill out for a while.

All right, so I want to throw one curve ball at you.

JOHNSON: All right.

RITHOLTZ: And as a West Coast girl, I got to ask you, you’re on the board for the San Francisco Giants. What was that experience like?

JOHNSON: So I was, now my brother Greg is the control person at the Giants. Look at, it was a blast, I have to say. The thing that I learned, I think I know a little bit about baseball. I don’t know anything about baseball. Baseball people talk about statisticians. They know every little …

RITHOLTZ: They’re quants, they’re all quants.

JOHNSON: This guy’s going to move three feet with this pitcher who goes up. And so pretty quickly I realized I don’t actually know that much about baseball. But I loved it, it was a lot of fun. And of course I was there as I teased my brother about when I was on the board we won three World Series. So what have you done?

RITHOLTZ: Right? What have you done, right? Exactly, that’s hilarious.

JOHNSON: Meanwhile, he actually knows a lot about baseball and I don’t.

RITHOLTZ: That’s very funny. Just goes to show you that breadth of and depth knowledge doesn’t necessarily help you win championships.

JOHNSON: Well, I think the key was, Jenny wasn’t really involved in making too many decisions.

RITHOLTZ: Oh, you weren’t telling when to bring in the left hander? We need to switch pitchers? That wasn’t part of your responsibilities?

All right, so I know I only have you for a little while. Let me jump to my favorite questions that we ask all our guests, starting with, tell us what you’ve been keeping yourself entertained with. What are you watching or listening to these days?

JOHNSON: I just finished. I’m always way behind on these things. So I just finished, I think it’s called “Dead to Me” …

RITHOLTZ: Oh sure.

JOHNSON: Which is a Netflix series. It’s like a dark comedy …

RITHOLTZ: Very good.

JOHNSON: But very good. It was funny. And I’ve been watching a little bit of “Manifest.” That was one that …

RITHOLTZ: I’ve heard about “Manifest” I haven’t seen it yet.

JOHNSON: So anyway, and then, you know, I love to watch, there’s a streaming service called Curiosity Stream.

RITHOLTZ: Oh sure.

JOHNSON: And you know, it’s got great documentaries on science and history and stuff like that, so I tend to watch some things. I was trying to understand quantum computing and what it does, and quantum entanglement. And because from a tech standpoint …

RITHOLTZ: Entanglement, spooky action at a distance, yeah.

JOHNSON: Exactly, and so you know, so …

RITHOLTZ: Curiosity Stream has one of my favorite astronomy channels.

JOHNSON: I will check that out.

RITHOLTZ: It’s really — they do like deep, crazy stuff and you just get lost in it.

RITHOLTZ: Yeah, no, exactly. So I love watching that kind of thing. Huh, really interesting.

I know the answer, but I got to ask anyway. Tell us about your early mentors who helped shape your career.

JOHNSON: Well, my father is my early mentor and continues to be my greatest mentor. I feel incredibly blessed to have him and grateful. And like I said, he never tells you what to do, but he’s always great if you ask. He’s always great at giving you his opinion and really incredibly thoughtful.

RITHOLTZ: Really interesting. Let’s talk about books.

JOHNSON: I have to say something about my mom for a second.

RITHOLTZ: Go ahead, all right.

JOHNSON: Okay, so you got to understand, my mom had seven kids and then went back to Stanford Medical School.

RITHOLTZ: Oh really?

JOHNSON: So while my dad was building Franklin, she was doing that and she’s 87. They’re amazing and you know, you had to be in a real partnership.

RITHOLTZ: How long did she practice for?

JOHNSON: Oh, I think she practiced probably 25 years.

RITHOLTZ: Wow, after seven kids went to medical school. That’s a hell of an accomplishment.

JOHNSON: I think she probably decided she needed a reason to be out of the house.

RITHOLTZ: That’s very funny. Let’s talk about books. What are some of your favorites and what are you reading right now?

JOHNSON: I am reading a book on Kissinger right now, but I think, you know …

RITHOLTZ: His book or someone else’s biography?

JOHNSON: I’m reading Walter Isaacson’s book on Kissinger.

I loved his book on Steve Jobs.

RITHOLTZ: Fascinating, really fascinating.

JOHNSON: A few of the books that he’s done. So I like historical fiction and I like history books. Probably Ken Follett, I really enjoy historical fiction books. He had the ones from World War I, World War II. He’s a great one called it’s about the building of cathedrals. “Pillars of the Earth” I think it is.

RITHOLTZ: Every one of his books could absolutely be a movie. Right? I mean they all are like a James Bond unwind. But by the way if you liked Isaacson’s biography on Jobs, I’m drawing a blank on his name is on the tip of my tongue. Did you see the book on the Wright Brothers? Oh David McCullough.

JOHNSON: Oh yeah, yeah.

RITHOLTZ: So fascinating.

JOHNSON: Is it good on the Wright brothers? I haven’t read that one. He’s another one I’m a big fan of.

RITHOLTZ: Right everything he writes it’s just …

JOHNSON: Is amazing, yeah.

RITHOLTZ: Right? It’s like he was there reporting on it and a hundred years forward.

JOHNSON: Exactly.

RITHOLTZ: Just so much details.


RITHOLTZ: Down to our final two questions. What sort of advice would you give to a recent college graduate who is interested in a career in either investment management or finance?

JOHNSON: You know, I feel like as an industry we don’t do a good enough job at selling people and what we do. And I tell the story about, I have five kids and with my daughter, I was talking to my daughters and I said, “So are you going to join me in this industry?” And one of my daughters said, “No, mom, I want to do something that helps people.” I’m like, “Are you kidding me? This industry is a great industry to help people.” You wouldn’t have the vaccines that we had without the businesses that were out there that were investing and trying to find opportunities.

We help people, I say at Franklin Templeton, to achieve the most important financial goals of their life. And by the way, every goal, not every goal, most goals require some financial component.

RITHOLTZ: Buy a house, retirement…

JOHNSON: Kids’ education, whatever.

RITHOLTZ: Right, down the line.

JOHNSON: So my first thing is to say this is just a great industry to be in if you want to make a difference and you want to help people. You think about some of the stuff on ESG, the kind of impact investing, those types of things. All of those things require money. And so one is it’s a great industry. Two is go in and be just curious. Ask questions. Read. I always say to people, read the CEO’s letter in an annual report if you want to know what’s on your boss’s mind, right? Because they’re going to lay it out there and try to connect what you do to the bigger picture of whatever a company is.

RITHOLTZ: Really interesting. And our final question, what do you know about the world of investing today you wish you knew 35 years or so ago when you were first starting out?

JOHNSON: Well, I think the tenets that have always been important, which we talked about earlier, like diversification, get invested early, the value of compounding, dollar cost averaging, where you just keep committing, you know, and investing month after month after month. Those things get lost sometimes in the stories, and yet they’re probably the most important things about investing.

RITHOLTZ: Really, really, really good stuff.

Jenny Johnson, thank you so much for being so generous with your time. This has just been delightful.

We have been speaking with Jenny Johnson. She is the CEO of Franklin Templeton.

If you enjoy this conversation, well, be sure and check out any of the 500 other such conversations we’ve had over the past nine years. You can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcast. You can sign up for my daily reading list at Follow me on Twitter @Ritholtz. Follow all of the Bloomberg family of podcasts on Twitter @podcast.

I would be remiss if I did not thank the crack team that helps put these conversations together. Each week, Atika Valbrun is my project manager, Justin Milliner is my audio engineer, Paris Wald is my producer, Sean Russo is my researcher.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.





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