Jenny Johnson, President and Chief Executive Officer of Franklin Templeton, a global investment firm, addressed new Wealth Management students on their first day of Orientation this fall. As President and CEO, Johnson is responsible for the operation of all aspects of the business of the firm, sets long-range strategic objectives, and drives corporate priorities. Previously, Johnson served as Chief Operating Officer. Lecturer and Chair of Fiduciary Trust’s Board of Directors and General Trust Counsel Gail Cohen introduced Johnson to the new cohort.
Johnson discussed Franklin Templeton’s global role in the wealth ecosystem and the impact of automation in the industry, as well as what fiduciary clients will be looking to achieve in their wealth management goals. Franklin Templeton manages over $1.53 trillion in assets under management and is focused on delivering solid risk-adjusted returns over the long-term.
Franklin Templeton consists of numerous specialized investment management teams, each unique and autonomous, to offer the broadest product capabilities in the industry. She talked about the importance of the firm’s global footprint which consists of offices in 34 countries. Effectively and efficiently sharing insights across the specialist investment managers and investment teams has been crucial for the business to grow and for investment managers to learn and adapt.
“We encourage teams to share their expertise with each other,” said Johnson. “Not their particular buy or sell recommendations, but their ideas on macro trends or technology disruptions impacting industries.” During the pandemic, Johnson focused on keeping these channels of communication open between investment teams. For example, there were questions about the risk to portfolios due to their concentration investing in companies with ties to supply chains in China. With investment hubs in Singapore and Silicon Valley, as well as investment analysts residing in emerging market economies, including a local team in China, the Franklin Templeton Investment Institute was able to draw from the expertise of these individuals and help investment teams think through the implications to businesses and economies if companies began to diversify their supply chains.
Another example of the benefit of the in-depth active research capabilities at Franklin Templeton was a question all investors had during the pandemic of, “When will there be a vaccine so that economies can start to open up?” The teams turned to Dr. Wendy Lam, a research analyst on Franklin Templeton’s biotech team. On vaccine rollout, the teams were able to position their portfolios based on her expertise. Sharing such insights across these global teams was crucial, and clients found real value in the results.
“Our industry has become so focused on measuring performance against a benchmark that we sometimes fail to remember that clients’ goals are not measured in benchmarks; they are measured in things like having enough money to live comfortably in retirement or being able to help pay for their children’s education. Those goals resonate with clients, and we need to do a better job of describing what we do in terms of what it means to clients.
“If an asset manager beats a benchmark every year, but suddenly there is a massive market correction the year the client wants to retire and the portfolio hasn’t been appropriately de-risked, then we have failed that client,“ said Johnson. “Customizing investment solutions to meet clients’ personal goals is what drives us at Franklin Templeton. Investment performance is just one component of what we offer our clients, but it needs to be packaged in a good financial plan.”
Another concern of wealthy clients–those who have enough money to ensure they can live comfortably and pass on wealth to the next generation–is whether the next generation will be productive if given too much money too early. “They want the next generation to be financially literate and contributing members of society,” said Johnson. “Additionally, the first generation who created the wealth are often entrepreneurs who risked so much to build their own wealth that they want to optimize their trusts and estates, and structure their family office for success.”
Cohen added to this idea, the importance of supporting the younger generation in a family office. “You can always position philanthropy for educational purposes. Have the kids participate in making the decisions,” she said. “Which grantees or charities should the family support? There is also opportunity on the investment side – which mutual funds should the family invest in? This can give children a solid grounding.” Part of a wealth manager's value-add is to guide families through this process.
Johnson answered students’ questions about the importance of work/life balance. “Franklin Templeton was started by my grandfather, and my father grew it. I have always been passionate about what we do, which makes it easier to manage both a family and a business,” she said. “But women still carry a disproportionate share of home responsibilities. It’s not uncommon for a woman to ask to leave work to go home and care for a sick child, but it’s less frequent to hear men say that. And I would argue there is even a stigma between men when they verbalize the need to take care of domestic duties at the expense of work. A supportive organization will encourage men to be vocal about their family responsibilities as well, which will lead to greater equity.” Johnson’s advice when work and home duties are in conflict, “I ask myself: five years from now, when I look back, which of these will be more important to me? I have often found clarity by asking that question.”