Capital Decanted – Season 2, Episode 2: "The Great Convergence"

Original air date: September 25, 2025
Hosts: John Bowman and Kristi Townsend
Guests: Jenny Johnson (CEO, Franklin Templeton), Jean Hynes (CEO, Wellington Management)
Theme: How asset management is being transformed by the blurring of lines between public and private markets, traditional and alternative strategies, and what this means for firms, investors, and capital allocators in the coming decade.

Episode Overview

Season 2’s standout episode dives deeply into the accelerating convergence between public and private markets. “The Great Convergence” examines the motivations driving traditional asset managers into alternatives, unpacks the historical barriers that used to segment asset classes and business models, and challenges enduring beliefs about manager scale, diversification, and client outcomes. Industry pioneers Jenny Johnson and Jean Hynes provide distinct perspectives on how their firms are building out multi-strategy platforms and adapting to the new age of cross-pollinated asset management.

Key Discussion Points & Insights

Setting the Stage: Why This Convergence?

[00:00 - 08:13]

• The hosts introduce the concept of "Decanter's Half Dozen," the most impactful episodes of the year, with "The Great Convergence" topping the list.
• They frame the episode as a reaction to the blurring—and even collision—of boundaries between public/private, traditional/alternative investment firms.
• John: "It's a race to build out a full suite, Turkish bazaar, a stable of thoroughbreds, you might say, of investment strategies... The current news flow, it seems like I can't keep up... mostly mayhem and chaos." [04:03]
• Episodes of major mergers and partnerships have surged, changing the landscape for asset owners and asset managers alike.
• The hosts outline the intellectual journey: a brief history of these market silos, exploration of why the walls have come down, and a look at the implications for clients and the industry.

Inflection Points in Asset Management

[08:13 - 24:26]

• Kristi: Recounts being shocked as a young analyst seeing hedge funds invest in venture capital—highlighting the end of strict investment “buckets.” [08:13]
• The real wake-up came when pension funds started viewing large asset managers as strategic partners for breadth and stability.
• John: Cites the Hamilton Lane and Russell Investments deal as an early, game-changing crossing of the public/private divide.
• The historical recap details how private equity and alternative firms spun out of Wall Street in the 1970s/80s, originally as deal-centric, finance-driven entities (KKR, Blackstone, Carlyle, Apollo). These firms only slowly evolved toward diversified asset management.
• The GFC was a turning point: "This was the epic reset button moment... rising from the ashes... would be the golden age of private capital.” [15:02]
• Post-GFC, multi-strategy models and M&A booms accelerated, with larger traditional fund groups (T. Rowe, Amundi, Franklin Templeton, etc.) moving aggressively into alternatives.

The Great Convergence in Action

[24:26 - 35:42]

• Mark Rowan’s (Apollo CEO) viral interview:
  • Predicts that soon, the distinction between public/private markets will vanish; excess return will not depend on asset class, but on skill in origination and underwriting.
  • Mark Rowan: "A year from now...you won't be able to tell the difference between the issuers, the ratings, the sizes or the liquidity of the public and private markets..." [22:51]
• Kristi's Analysis:
  • Agrees convergence is real, especially as capital inflows erase alpha in once-niche markets. But she highlights that private and public credit will retain important distinctions around liquidity, transparency, and underwriting expertise.
  • She cautions about oversimplifying the risks and need for real operational rigor in alternatives.
• Why is this happening?
  • "The old model... chocolate and vanilla and a little bit of strawberry, meaning equity debt and a little bit of alternatives. That is old thinking." [28:09 – John]
  • Three main drivers (John):
    1. The "Financial Supermarket" 2.0: Asset owners seek one-stop-shops, especially investors with less internal expertise or those fee-sensitive.
    2. Revenue Land Grab: Alts drive ~50% of industry revenues from only 15% of assets; more firms want a share.
    3. Democratization and Pressure from Retail: High-net-worth individuals are moving from 2–5% alts allocation to as much as 10%, creating a tsunami of capital and the need for product innovation.
• John: “If the average high net worth investor simply increases their allocation from... 2 to 5%... to 7 to 10%... you’re talking about a multitrillion dollar tsunami of capital flowing towards alts…” [33:23]

Implications for Investors and Institutional Beliefs

[35:42 - 45:55]

• Kristi: Challenges several "rules of thumb" about why allocators disliked platform-based asset managers:
  • Size ≠ always bad: There are strategies, like distressed credit, where large scale helps returns.
  • Autonomy and focus can persist when leadership allows subsidiary funds ("child companies") sufficient freedom; bureaucracy is not inevitable.
  • Compensation and incentives can be aligned even in larger organizations.
  • Larger platforms bring undeniable advantages: operational, back-office, regulatory, sourcing, and the ability to quickly launch new strategies on client demand.
  • “One of the biggest benefits... is just that it has adequately met the needs and demands of many of the LPs that they work with.” [43:50]
• Selection questions: How to underwrite a fund within a big platform? Consider autonomy, compensation, structural alignment, level of integration, and fund committee independence.
• The transformation is not simply for its own sake, and “private vs public” is less meaningful than which strategy serves the investor’s needs and risk profile.

Halftime with Tony Davidow (Franklin Templeton) – The Imperative of Education

[49:09 - 54:29]

• Tony Davidow:
  • Emphasizes the necessity of education in alternatives, given complexity and potential opacity.
  • Tony: “The temptation is to sell product as opposed to educating consumers…to have a successful outcome for investors and advisors, we need to lead with education.” [50:00]
  • Industry is still in the “early innings” of democratization; slow, methodical education is necessary, especially about private illiquidity.
  • “If directionally we think that number [alts] should be 10, 15, 20%...we're still in the early innings, but...I would rather go slow and do it right as opposed to rush...” [52:15]

CEO Roundtable: Jenny Johnson & Jean Hynes – Leading Through Convergence

[54:50 - 94:27]

What Sparked the Shift?

• Jenny: Regulation (higher capital requirements post-GFC) reduced bank lending, pushing more activity into private credit. Companies now remain private longer, shifting growth appreciation to private markets.
  • “Our job is to help people to achieve whatever their financial goals are…in order to meet that mission…you have to play in both lanes.” [56:09]
• Jean: SEC rules post-GFC also made it harder/more costly to go public, pushing companies to delay IPOs.

Will Public/Private Lines Truly Blur?

• Jean: Agrees directionally; in fixed income, public/private are already blending. Still, private markets’ complexity, information flow, and illiquidity mean convergence will be a gradual evolution.
• Jenny: A private credit analyst without knowledge of both realms is "managing and trying to do research with half the information." Cautions especially about illiquidity in private equity for retail/institutional investors.

Strategic Rationale: Supermarkets vs Specialization?

• Jenny: Institutional investors still assemble portfolios manager-by-manager, but wealth/distributor channels want fewer, broader relationships. Scale advantages—especially technology/data/AI—favor large platforms.
  • “... the amount of money we spend on just external data... You need just a massive amount of data... so one of the benefits... is that we could never compete with what is required to be able to compete within AI [as an independent].” [64:48]
• Jean: The biggest platforms can provide R&D and tech capabilities but alpha and innovation often emerge best in small boutiques. "There’s no scale to innovation." [66:33]

Build vs Acquire: Two Approaches

• Jean (Wellington):
  • Built alternatives organically, expanding from traditional equities to fixed income, hedge funds (since 1994), then private equity (since 2014). Focuses on areas “adjacent” to their core strengths (late-stage venture, climate, biotech, private placements, etc.) rather than direct lending and buyouts.
  • Jean: "It all started from a growth investor recognizing that companies were staying private longer...that’s so obvious now." [68:52]
• Jenny (Franklin Templeton):
  • Took a more acquisitive approach—~$8 billion over a decade, including powerhouse alternatives like Clarion (real estate), Benefit Street (private credit), Lexington (private equity secondaries), K2 (hedge funds).
  • “If you’re acquiring people in the asset management business, you’re acquiring people in their investment process. Don’t destroy value by going and messing with that. Add value at the platform level.” [75:00]
  • Shared stories demonstrating how bringing divisions together (credit, real estate, multi-asset) can spark innovative solutions, e.g., developing a new real estate debt fund from cross-team collaboration.

Maintaining Culture & Innovation at Scale

• Both: Stress the necessity of maintaining boutique autonomy within a large platform, but also the huge benefits of shared data, technology investments, and occasional “microculture” clashes.
  • Jenny: “It takes being comfortable with each other and building that rapport... that you get that benefit.” [82:04]
• On hiring and talent: Private investing requires both analytical and networking (EQ) skills; public markets are different personality types—a key consideration for integration.

The Democratization Tsunami

• Jean: Wealth/retail adoption of alternatives is still “very, very early days”—right now, only a sliver of advisors use them, but as simpler vehicles emerge and education spreads, this will change.
• Jenny: Stresses that “running with scissors” in private markets is a real concern; advisor education is critical so that the “democratization” of access does not merely send clients into bottom-tier managers offering low fees.
  • Jenny: “We are at that same point today [with alternatives] where we have to come up with innovative vehicles to be able to responsibly deliver the access completely.” [88:26]

M&A and Competitive Positioning

• Jenny: Franklin now has a “very full plate;” the only open gap is infrastructure, but competition and pricing for remaining opportunities make further deals hard. “If you haven’t been on this journey already for some years, [it’s hard] to actually be able to catch up now.” [92:07]
• Jean: For Wellington, secondaries is a target area to build organically. Also points to continued evolution in 140/40 strategies to address public market concentration.

Notable Quotes & Memorable Moments (with Timestamps)

• “It’s a race to build out a full suite Turkish bazaar... but it is mostly mayhem and chaos.” – John [04:03]
• “I was a brand new baby analyst and being shocked that a certain hedge fund out there was invested in venture capital. And I was like, that can’t happen.” – Kristi [08:13]
• “In my view, a year from now...you won't be able to tell the difference between the issuers, the ratings, the sizes or the liquidity of the public and private markets.” – Mark Rowan (quoted by John) [22:51]
• “More of the economy is in the private market...I don’t think we’re seeing [full convergence] at all yet. But...eventually people will...think in terms of equity and credit buckets, not public/private buckets.” – Jean Hynes [58:45]
• “If you’re acquiring people in the asset management business, you’re acquiring people and their investment process. Don’t destroy value by going and messing with that. So then add value at the platform level.” – Jenny Johnson [75:00]
• “There is no scale to innovation.” – Jean Hynes [66:33]
• “If the average high net worth investor simply increases their allocation from... 2 to 5%... to 7 to 10%... you’re talking about a multitrillion dollar tsunami of capital flowing towards alts…” – John [33:23]
• “I think it does appear...the broader industry is [now] increasingly acquisitive since you started your own acquisition spree...we now regularly see news... about purchases, mergers, joint ventures.” – Kristi [90:31]
• “You cannot access the global economy in public markets...anywhere near...like many of us started in our 401k...20+ years ago.” – John [96:53]

Takeaways for Asset Managers and Allocators

• Convergence between public and private, traditional and alternative, is now mainstream and irreversible—whether through M&A, product innovation, or client demand.
• The rationale: client convenience, revenue and wallet share, and the push from wealth/individual investors toward alternatives.
• There are both benefits and tradeoffs in platform models: operational leverage, cross-team insight, and speed vs. concerns about autonomy, innovation, and “size killing returns.”
• Education and alignment matter—democratization must be responsible, matching liquidity needs and investment sophistication to structure.
• Scale and technology, particularly data and AI, are increasingly key differentiators—yet innovation often still starts small.
• Both Franklin Templeton and Wellington offer case studies on different strategic approaches: acquisition-led versus organic build, both focused on harmony between scale and boutique independence.

Useful Timestamps

• [00:00] – Introduction and context for the episode
• [08:13] – When the hosts realized old asset class lines were obsolete
• [17:12] – How the GFC was the “reset button” leading to the new age
• [22:51] – Mark Rowan’s “Great Convergence” and what it means
• [35:42] – Kristi dissects the benefits and pitfalls of big multi-strategy firms
• [49:09] – Halftime w/ Tony Davidow: the imperative of education in alts
• [54:50] – CEO roundtable: Jenny Johnson & Jean Hynes unpack their strategies
• [64:48] – On the financial supermarket and scale’s impact on tech/AI capability
• [72:32] – How Wellington built (not bought) alternatives; the practical challenges
• [75:00] – Jenny Johnson: philosophy on acquisitions and leaving “child companies” alone
• [88:26] – The next step in democratization & the risks that come with it
• [93:14] – Where CEOs still see gaps and where the next buildout may occur

Tone & Closing Thoughts

The episode is thought-provoking, witty, and rigorously analytical. The hosts and their guests challenge listeners to think beyond old dichotomies and embrace the messy, creative synthesis now underway in asset management. The central lesson: future success demands both bigger platforms leveraging technology and talent, as well as the preservation of entrepreneurial cultures that power alpha and client focus.

As John concludes:
“This is not just about juicing returns where I think we get tied around the axle in debates in the industry... this is simply about fairness in the retirement promise and in the return promise for beneficiaries of just having access to the global economy.” [96:53]

For listeners and professionals alike, this episode is a masterclass in the forces reshaping capital allocation, with rare transparency and candor from two of the industry’s most respected CEOs.