The Leadership Odyssey: Part 1 – Ep. 307

Welcome to the Accumulating Wealth podcast. I’m Hunter Satterfield. And I’m Judson Crawford. We’re CPAs, wealth advisors, and partners at Cain Watters and Associates, a financial services firm here to help you navigate the decisions you face every day. Today, we are honored to begin a two-part conversation with Jenny Johnson, CEO of Franklin Templeton, one of the world’s leading investment firms.

Her career spans operations, technology, wealth management, and investment management, giving her a rare view of leadership through change. We’ll discuss opportunity, risk, innovation, and the leadership principles shaping both her career and Franklin Templeton’s future. Let’s do it

Okay, listeners, super pumped for this episode and next. We have the amazing, incomparable Jenny Johnson from Franklin Templeton, the CEO of Franklin Templeton. Jenny, amazing to see you again and also to have you join us. Thanks again. Great to be here. Thanks for having me.

Folks, we are in studio. Jenny is an amazing place, very beautiful. Much prettier than Texas, Judson. It’s hot right now. Yeah. Extremely. It is. But listeners, we’re super pumped about this. I’ve known Jenny now for four or five years. We work closely with Franklin and their team. But she is a superstar in the industry, and I think a lot of what we’re going to be talking about, Judson, over these next two episodes is going to hit home with folks related to leadership and how you grow and how you think about the future. And so it should be, I think, awesome for our entrepreneurs. Absolutely.

We’re super glad to have you. And might as well just go ahead and start. Indeed, yeah, so let me do a little quick intro, everybody. So, Jenny Johnson, as we mentioned, CEO of Franklin Templeton. We might get to some of who Franklin Templeton is if you don’t know, but it’s one of the largest global investment firms managing $1.8 trillion, Judson. I think that’s a lot. Seems like a lot. Little bit of money.

She is a third-gen leader, which is super cool and part of her story. She’s the granddaughter of the firm’s founder, Rupert Johnson. Her dad was also instrumental for almost 50 years, Charles Johnson. We’ll talk about that.

She rose through the ranks for over 35 years, took over as CEO in February of 2020. Wow. Yeah. Interesting timing. There was a little bit going on. Yeah, just a little bit. interesting time. Yeah, we’ll get into that. But just the last couple of things. She’s been named Forbes’ World’s 100 Most Powerful Women, Barron’s List of 100 Most Influential Women in U.S. Finance, and The Pension Investments Inaugural Class of Influential Women in Institutional Investing, among all the other things. Wow, impressive.

All right, let’s go, Judson. What do you want to do? All right, Jenny, I’m always interested in people’s educational background. And you went to UC Davis. I looked at your education. You have a BA in economics, and I think that probably makes some sense. But you also dual majored in physical education. Was there a minute where you thought maybe not to go down the family path and thought about doing something different?

So first of all, I think I dropped the physical education side of it because I got so many people like, “What were you doing?” And by the way, I think it was actually a far harder major than the economics because it was kind of people who went into PT pre-med, and I was working on cadavers in college, which very few people ended up being able to do at that level.

Yeah, there was a period of time where I thought about – it was a blip, because I always wanted to go into the family business. But there was a period of time in college where I thought, “Maybe I want to go into coaching,” and I coached the local middle school, and I’ve coached high school.

And then I kind of decided, you know what? I can always volunteer coaching and probably have a little bit more comfortable lifestyle if I go into business, and so I could get both those passions out. So, it was just a brief flash in the pan when I thought about doing a career in coaching, so.

Now you’re coaching, is it basketball? Basketball and volleyball were the two things. Okay. And then I coached all my kids’ soccer. Oh. So, I played competitive soccer up till about 18 so I ended up coaching those guys.

I would imagine that your coaching in junior high, high school, your kids, all of that, probably has a lot of value in what you’re actually doing in your business as well, though.

For sure. I mean, I think what a job of the CEO is, is getting the right team. And as we all learned from the Dream Team, you guys are too young, but when the US put together the Dream Team basketball players of all the best players and they lost, a team is not about a bunch of individual superstars. It’s about a great team that operates together, and I think that’s the number one most important job of a CEO.

Yeah, and I can’t wait to get to maybe your four Ps, which we’ll get to in a little while. But before we do that, like, your story is fascinating in how you got to where you were. Famously, you’ve talked about starting in the mail room at age 14, so maybe we do that a little bit.

But, I mean, you’ve been in operations, technology, wealth management, investment management, now of course CEO. You’ve lived in California. You’ve lived in New York. I mean, it’s interesting because we talk to our advisors a lot and also our clients a lot about the importance of this multidisciplinary approach.

And I actually think, like Ben Franklin, the namesake of the firm, his quote, “Habits of mind” about how the linkage between different things, whether it’s art, philosophy, history, physics, that’s actually how we think broadly about sort of the world. But I think it’s interesting about your story because you’ve been in so many different areas.

Like, as all of these areas have come together, the common theme almost is you just said yes. Like, it was just sort of this, “Hey, okay. Whatever is next.” You want to talk a little bit about part of just saying yes to opportunities and what that’s meant in your life and your career?

Yeah. I mean, look, as a CEO today, I have to tell you, I couldn’t be happier and really grateful and thankful for the people who sort of supported me on this for running our technology group. I think if you’re a CEO today with the advances in technology, AI, to have a deep background and understanding of technology is so helpful, and I think if you don’t have that, it could probably be a little bit overwhelming and sometimes scary. So I’m really thankful that I touched every part of the business.

I always tell people that the two areas that I look back on my career that were the most significant to helping me be prepared for this job was one, running technology, and two, I ran an auto finance group. We, at one point, Franklin had a bank. Long story and we did auto finance.

The understanding around credit and leverage- I also ran a credit card… we had a credit card business. And understanding the power of data. This was all the way back to the early 1990s. The credit card companies that really got their arms around data sort of left everybody else behind. And so I became passionate about understanding how data can predict behaviors. Way before that, it was kind of a fashionable thing.

And so, when I ran the auto finance business, it was a full P&L on its own. And I always say, when you’re CEO of a small company and CEO of a big company, it’s the same problems. Getting the right team, allocating capital. In that case, do you put money in collections? Do you put money into marketing? Do you put money on front-end verification? Those are decisions that every CEO makes, it’s just more zeros or less zeros.

And so, I was really thankful for having that experience. And so I think, that sort of, don’t say no, being curious, being open-minded, going in and really, when you move into an area, come at it with a blank slate from the standpoint of, “I need to absorb and understand what the drivers are of this particular activity.”

But I will say that there was one point, and I regret it now, it turns out I’ve done okay without that decision. But I remember my father came to me and he said, “I’d like you to run the investment groups.” And I said, “Dad, I don’t have any real experience in that area. No, I don’t think I’m the right person to do it.”

And when you run investment teams, it’s about talent, it’s again about allocating resources, it’s about investment process. I’m really good at process. But I didn’t have the confidence to do it, and I think in retrospect, having some faith in the people that are above you who will often guide you, I think it’s more of a women issue where we’ll say, “No, we don’t have the background or whatever.” I think it’s really important to lean in on those opportunities even if you don’t have 100% of the capability. Because if you’re curious and willing to get into the details, you’ll learn on the job.

So, was it a part of the plan from the get-go for you to work in different parts of the business, or is that where the business took you and you just went? Because you had this concept of like, I’m going to learn all these things so then eventually I can link them together and wherever my future goes.

It was totally where the business went and where I was curious. My father said to me when I said I’m going to go run the credit card department in the bank, he goes, “Why would you want to work in a bank? It’s like a teeny, little part of the business.” But I just knew I could make a difference. I was curious about it. And like I said, I mean, it taught me so much about the data and how to think about data and probably led me ultimately to kind of the technology element. I think it was more around, oh, there’s a business opportunity here, there’s a job opening here. I think I’m curious, let me go into that.

Yeah, you brought up your dad a couple different times, and obviously super influential guy, not only in your life, but in your career and in the business as a whole. I think people will be surprised to know, even though this is a third-generation family business, it was really your dad that took it to extremely different levels, right? So, can you tell us a little bit about your dad and maybe just one of the many things that you would say that he imparted you with through his career?

I love bragging about my dad. It’s pretty funny because people always say, “Well, you’re not the founder.” The reality is my grandfather had a brokerage business that was fairly… it was kind of a mid-sized brokerage business, and there was a little subsidiary called Franklin Funds. And my dad’s older brother took over the brokerage, took over the family business, and my dad said, “Well, I want to do my own thing. I’d like to buy this little asset management business called Franklin Funds.” It was $2.5 million dollars in assets and $10,000 in revenue. The company was started in 1947, and I think my dad took it over in 1955.

So, at that point they’d raised $2.5 million dollars in assets. And so, he really was the guy who built the business and grew the business. And so, I always feel like he should get the sort of founding status of it. And then my brother ran it for 15 years and it’s always easier and more fun to talk about your dad because you just revere him. My brother, he still is a great… He’s the executive chairman of the board. He got us honestly into private markets really early before any traditional asset managers were thinking about it.

We bought a private credit manager in 2018. So, he ran the company for 15 years and is still executive chairman. We’re a public company but the family still has a big chunk of stock, and so I always say we have the discipline of a public company with the inflexibility of a private company because you can make longer term decisions when you have that kind of chunk of stocks. I think we’re really fortunate. And you asked what advice. My dad gave me probably the best advice that you can give any CEO, and that is take care of the client, the business takes care of itself.

Like, never worry so much about a quarterly earnings number that you’re not focused on what the client’s needs are. Because if you can meet the client’s needs… and by the way, the client doesn’t always articulate exactly what their need is. Like, none of us said to Apple, “I really am looking for this computer in my hand,” right?

Like, Steve Jobs understood that was something that people would want. So, you have to kind of get through… You know, so if you think about financial advisors, honestly, what their clients are thinking about is, “Will I have enough money to retire? Can I help pay for my kids’ college?” Like, you have to get to the end and to understand what the advisor in our business is trying to achieve for their clients so that you can meet their needs with the right types of products and capabilities.

I love that concept of Jobs because Henry Ford famously said, “If I listen to the customer, they say, ‘I want a faster horse.'” Right? Yeah. Yeah. And it’s so interesting. They’re not always going to say that. I think it’s interesting you talk, and I want to double-click very quickly on the story of the firm, because your dad started, took over the firm, to your point, with $2.5 million of AUM, and now of course it’s $1. trillion, so obviously incredibly influential over his career of 47 years.

I’ve heard you talk about before how, like, your mom knitted the curtains in the offices, and it was a family business. And so, like, how have you seen over the past 50, 60 years as you guys have gone out on acquisitions and M&A, but also just pure growth, how have you seen the culture, if at all, change? And if it hasn’t, how have you kept that sort of more toward that family business type culture?

Yeah. So, she sewed the curtain. She didn’t knit them. It would’ve taken a long time to knit. Fair enough. Fair enough, yes. Get it straight, Hunter. God. You don’t thrive for almost 80 years without having a culture, one, focused on the client, and two, focused on innovation, right?

So those are two, I think we hit on that point of like the client doesn’t always articulate about what innovation means to that client. But they know that they’re going to want more things to help them achieve their goals, and I think in our world today, a lot of that’s around personalization.

We have much greater technology tools to be able to provide more personalization for the end client. So, I think as a firm, we’ve been able to kind of reinvent ourselves. Today we’re real leaders in tokenization and blockchain. We think that the future of financial services is going to be on the blockchain rails, and so you have to lean in on that.

On the other hand, most of our clients aren’t actually asking for wallets in blockchain. They will eventually when they see some of the benefits that come from that technology. But we have to, as a firm, build that expertise, build that capability, and be patient as to when it ultimately becomes material and important to our clients. And so it’s that balance of delivering what the needs are today with where the future, I think, is going.

Well, let’s talk a little bit about your four Ps and we’ve already touched on a few of them. But I think starting with people and you talked about building teams but also your clients. And I think that, in a similar way, the game has changed, right? We’ve got all this technology, we’ve got all of these different things, but when it really comes down to it, we’re in the business of people. And our job has changed over time. There was a point in time where maybe a lot of your people were stock pickers.

But in a lot of ways, we have to be team builders and psychiatrists and psychologists and all of these different things. So, tell us a little bit about how you approach that in your four Ps, specifically towards people, and then we can move on from there.

Sure. So, the four Ps are people, passion, purpose, and persistence. So, somebody asked me like, “What’s your philosophy on leadership?” And I was trying to kind of come up with… and to me I realized, okay, those are the four things. And so, the first is the people component. And as I mentioned, putting together the right team that’s motivated, works well together, collaborates together, is the most important decision a CEO can make.

And the challenge is sometimes, especially when businesses are evolving, somebody was the right person for the business at that time, but now the business has moved away from that, and your job is, and probably the hardest part of the job, is somebody who’s been really good, loyal contributor to a firm, and you have to say, “I have to make changes,” right?

But if you don’t, my dad also says, “You are either a tough boss or you work for a tough boss.” But you can be a tough boss with compassion. but you have to make those tough people decisions. And I think it was Jack Welch who always said, “We’re always way too slow on doing…” It’s hard, that’s really hard because you have relationships, they’re emotional, but you have to put together the best performing team.

That is the job of the CEO. Passion, love what you do, and it doesn’t feel like you work. Like, I love this business. I get motivated every day thinking about the fact that we help people. On the one hand, we help people achieve the most important financial milestones of their lives. On the other hand, and I don’t think this is talked enough particularly to wealth management clients, about we are also the engine of innovation to improve people’s lives.

I look at my son, when he was 10 years old, was diagnosed with Type 1 diabetes. The moment he was diagnosed, his lifespan was reduced by 15 years. That number’s down to seven years. Why? It’s public companies out there, it’s private market capital that has created innovation around improving the care and management of a diabetic such that we are improving lives. That only happens because people invest in public and private markets to enable the capital to help people improve. That’s why I’m passionate about what we do.

And the third P is purpose. Describe what you do in a purposeful way, right? Because then people can– Like I tried to explain there, why am I passionate about this business? Because it helps people. It improves lives. If you can get your whole team fired up every day to come into the office and go, “We’re making a difference.”

And I often share the story about talking to my kids and I said, “Is anybody going to follow me in this business?” And my daughter goes, “No, Mom, I want to help people.” I’m like, “Help people. This is what we do every day. We help people.” And so that’s that purposeful description to inspire your team to be excited about what they do every day.

And then persistence. There are going to be more failures probably than successes, but you need to identify them quickly, acknowledge them, learn from them. Thomas Edison said, “I didn’t fail 99 times to make a light bulb. I learned 99 ways not to do it.” Right? And if you can put your sort of failures in that category of, “what did I learn from them,” they’re not really failures. They’re just making you better at the next opportunity to be able to deliver.

Yeah, I love those four Ps. We could probably record a whole episode, especially hearing you talk about your dad and what he’s taught you about persistence. So, folks, if you’re listening, you want to go read more, there’s tons out there on that and Jenny’s story there.

I do want to move on, Jenny, because again I’ve known you now for five years. I’ve seen you speak many times. You command a stage. Very, very impressive, listeners, when she’s out there, and folks really clue in and listen to her. And I think that’s particularly interesting in this industry because it has historically been a very male-dominated industry.

And for those that have been here at the office, you know that well over 50% of our client-facing professionals are females. We are nearing more and more, Judson, to where more and more of our clients, I don’t know what the percentage is, so many of our clients and business leaders are females as well.

So, Jenny, I would love to sort of double-click on this with you about whether it’s different types of advice or different things you’ve learned over the years about being a female leader, a female innovator, as you’ve said, in a traditional male-dominated industry.

Yeah, so I’m going to first give a little piece of advice on it. I remember one of our what we call futures associates, so this was kind of a new college grad, asked me a question. She said, “What do you do when you walk into a room and it’s all men and you know that they’re discounting what you say because you’re a woman?” And I said, “Well, actually I’d never walked in a room and thought that. Like I don’t think that way. And oh, by the way, don’t you think about it either.”

Because why let that thought, that insecurity, that vulnerability use your mind share when you need to bring 100% of your mind share to whatever it is in that meeting? And believe me, everybody walks in a room with a certain amount of insecurity, right? They walk in, maybe their education isn’t where it wants to be. Maybe socioeconomically they feel insecure. But whatever it is, people have insecurities. Try to push them away because the reality is you need your 100% mind share to be on trying to focus and solving whatever it is. So, I think that’s kind of the first piece of advice.

The second piece is, there is a reality I think we’d be foolish to acknowledge that when you walk into a party, the women tend to be talking to the women in the corner, the men tend to be talking to the men. There’s a natural comfort in that. And so, there’s an unconscious bias that happens where you’re going to feel that people who are more similar to you are probably the ones that should be promoted.

I always say, look, if I talk to somebody and they agree with me, I think that person is so smart. Look at them. They totally get it, right? But what has been proven is that if you… And I have a friend who’s a professor at UC Berkeley whose entire career, and she wrote a book called In Defense of Troublemakers, but the entire career was basically studying, saying the devil’s advocate doesn’t work, right?

You need people of disagreement because they will bring every possible angle to their argument to prove that they’re right to get better outcomes for solutions. But it’s a lot of work. So, if you build a team that all agrees, it’s easy to work together, they’re very collaborative, but it actually is not going to give you the best outcome.

So, encouraging your team to be diverse, have diverse views, to be comfortable with debate, to be comfortable arguing, to be comfortable disagreeing, which by the way is really hard to do and it’s a lot of work, but that’s where you’re going to get better teams. And it’s hard. I know I don’t always do it, but I really try to have that kind of conversation where you are going to push people to bring their disagreement. And with that, that means you need a diverse team. Diversity of views, and diversity of views are a lot of different things, it’s not just gender. But I think that to be a truly good leader, you have to be comfortable with that.

One of the things we talk a lot about with our clients is legacy. And you are, as we said, third generation, maybe a fourth generation behind you will come along and do what you did. But when we talk to clients about our legacy, what advice would you give our clients or your clients or even your kids about using that legacy for a springboard of success rather than maybe a barrier to them?

So, for my dad’s 80th birthday, he’s 93, We did a family vacation, and he brought in somebody, she’d been an estate lawyer, and she said, “I did all this work on building people’s estates, and then I watched the family completely self-destruct after.” And so, she wanted to study the families that had managed multiple, multiple generations, like the Rockefellers, the Rothschilds. Like, there’s a bunch of them out there that have managed… And it was kind of two things. One was, what are your family values? And so, we actually sat there and had my parents going through sort of their struggles to build the business and the sacrifices they made to build the business.

I mean, I ate Spam casserole every week. Like, that was where my mother was… she had X dollars for budgeting, and she bought our clothes at the Salvation Army, right? Like those were the things that she did to make sure she could live within the budget and that my dad could reinvest in the business.

And so, one, it’s understanding the sacrifices, and two, understanding the values of a family. So, if I recognize that I stand for these things, that’s what that legacy means, when you built that kind of knowledge within multiple generations, you saw that people behaved in sort of standing for those things.

And then the second thing was being willing to recognize which family members should carry sort of the assets and drive the assets, almost like a board of directors, right? And that you had to kind of understand what your role was in helping support sort of that family.

So, look at my children, of five kids, only one of them is in the business. The other four do completely different things. They’re following their passions, which I love. But they also understand that they still stand by whatever this kind of family values are. And I think that’s really important if you carry that kind of legacy on it, and you should talk to your kids about that.

I guess the third thing was talk about wealth in a positive way in which it is both a privilege. It’s a privilege because it’s going to give you certain opportunities. It should never be squandered. I mean, let’s face it, guys, there’s three sayings that I’ve heard across the globe.

In the U.S., we say T-shirts to T-shirts in three generations. In Holland they say clogs to clogs in three generations. And in Asia they say rice paddies to rice paddies in three generations. Why is that a global statement? Because often the third generation squanders the wealth. And so, you have to still stand by those core values, but part of that is parents need to talk to their kids about what their expectations of with that privilege, how they should think about it and what they should do with it?

Which is a perfect plug for the Accumulating Wealth Seminar, by the way, Judson. It is. Well, and Jenny doesn’t know, but listeners, that’s why we do the Accumulating Wealth Seminar, is to sort of- not to say force in a negative sense, but just create the opportunity for you to engage in conversations with your kids, right? Like we talk all the time and Jenny, you’ve mentioned this as well, about having an open dialogue both as your children are growing up, but then also as they reach adulthood about you can pursue whatever you want.

To your point, if they’re not going to be passionate about this industry, then they’re probably going to see failure there. And so, as a result, go chase what you’re passionate about. But that doesn’t mean that, again, we shouldn’t pay some attention to the legacy and really be wise stewards of it.

So anyway, that’s an amazing piece. And listeners, we’re actually going to bring Jenny back for episode two. We’re going to deep dive a little bit more about her leadership and the things that she sees in the investment space coming.

Judson, before you hang us up, I do want to call attention, folks, and give a shout-out to the Sapphire Circle. Jenny talked a lot about the gender differences and whatnot, and this is why we started the Sapphire Circle. It’s a community behind CWA’s Women in Wealth initiative. It’s created to help women gain clarity, build confidence, connect with others, like an amazing opportunity. And so, if you want to learn more about that, cainwatters.com/sapphire-circle. So, Jenny, we’ll see you in a second. Judson, you’re going to hang us up.

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* Editor’s note: At the time of recording, Franklin Templeton’s assets under management were approximately $1.8 trillion.