Podcast Summary: How I Invest with David Weisburd – E226: How Franklin Templeton Built a $1.6 Trillion Business Through Partnerships

Date: October 15, 2025
Host: David Weisburd
Guest: [Referred to as "John"—Senor Franklin Templeton Executive]

Overview

This episode dives into how Franklin Templeton has grown into a $1.6 trillion asset manager, with a particular emphasis on scaling its private markets portfolio (currently $260 billion). The discussion centers around strategic moves in alternatives, the evolution of private vs. public markets post-global financial crisis, the importance of long-term partnership over short-term gains, and the firm’s approach to integrating acquisitions, technology (including digital assets), and educating the next wave of investors.

Key Discussion Points & Insights

Structural Shifts Post-GFC and the Rise of Private Markets

• Three Structural Drivers for the explosive growth of private markets post-GFC:
  1. Regulatory Changes: "The advent of Dodd Frank and Sarbanes Oxley really changed the dynamic... pressures and costs of being a public company relative to being a private company." (02:30)
  2. Institutional Needs: Institutions needed to diversify and enhance returns after experiencing equity market volatility. (02:30)
  3. Capital Formation Efficiency: Private markets became more efficient at providing solutions for companies compared to public markets. (02:30)
• Franklin Templeton saw an opportunity not just for asset growth but for providing curated solutions to client needs.

Notable Quote:
"It's very curated, right? We're not sitting here saying, look, we want to just acquire assets ... We're really thinking about where are those fast rivers of opportunity that we want to deploy capital on behalf of our clients." – John (04:57)

The Case for Private Credit and Secondaries

• Private Credit ballooned from a nascent sector to a $3.5 trillion asset class, expected to reach $30 trillion. Franklin is focusing on this due to bank disintermediation, especially after the regional banking crisis. (14:44)
• Secondaries Market: Once niche, now breaking record volumes ($160 billion last year, over $200 billion projected) and increasingly foundational in portfolios. (05:59)
  • Secondaries provide risk-adjusted opportunities, faster liquidity, and diversification.
  • Expect further stratification (e.g., 'tertiary' and more differentiated secondary products).

Memorable Moment:
"Today we're increasingly advocating and seeing investors embrace [secondaries] as much more foundational in portfolios." – John (06:22)

Volatility, Alpha, and the Evolution of Alternatives

• The "risk-on" environment post-2008—driven by low interest rates and a need for yield—led institutions to alternatives.
• Cliff Asness's 'Volatility Laundering': While private assets appear less volatile due to infrequent marking, the underlying risk remains; what matters is long-term orientation and robust valuation. (10:17)
• Increasingly, alternatives became not just a "search for yield" but an alpha generator—much like evolutionary traits that began as signals but turned functional (an analogy to dinosaurs developing wings). (12:42)

Strategic Portfolio Construction at Scale

• Franklin built specialized verticals through acquisitions (e.g., Benefit Street for credit, Clarion for real estate, Lexington for secondaries), always focusing on long-term thematic trends and demographic shifts (e.g., industrial, senior, student housing).
• Heavily avoids trying to be a “supermarket” of offerings; stays focused on areas where the firm can genuinely add value and generate alpha. (17:40)

Notable Quote:
"This is not about like we just want to have a sort of supermarket of things. We want to be very focused on, you know, where do we see those key opportunities in private markets." – John (19:30)

The Modern Partnership Model

• “Partnership” is more than a buzzword; it means deep, consultative engagements.
• Franklin prioritizes holistic client engagement, empathy, and understanding the true needs of both institutional and retail clients—customizing solutions rather than pushing products. (22:04)
• Retaining Acquired Talent: The "secret sauce" in M&A is preserving specialist cultures, incentivizing teams, and offloading operational burdens so investment expertise can flourish. (23:36)

Notable Quote:
"At the end of the day what we want is the investment teams who are integrated to be hyper focused on exactly what they've been doing. Keep that culture that made them very successful investors and hopefully enhance it in different ways." – John (24:12)

Culture, Entropy, and Long-Termism

• Franklin Templeton, led by third-generation CEO Jenny Johnson, maintains a long-term outlook, resisting “big company entropy” and short-term pressures.
• Example: Early and deep investment in a 60-person digital asset team—demonstrating organizational willingness to take long-view bets rather than chasing immediate returns. (27:10)

Notable Quote:
"You think of us as a public company, but our insider ownership is rather significant ... It's about long termism, right? It's thinking not about the next eight minutes, but ... the next eight years." – John (27:28)

The LP Perspective: Why Choose a Platform?

• LPs are consolidating managers, seeking fewer, deeper partnerships. This trend is driven by complexity, the need for operational scale (tech, compliance, global insights), and difficulty generating excess returns in today's environment. (32:22)
• Franklin pitches its breadth, operational resilience, forward-looking tech investments (including AI), and a true partnership mentality.

Growth in Retail and Navigating Liquidity Education

• Franklin is roughly 50/50 retail/institutional; leveraging retail roots as private markets expand access to individual investors.
• Concern over products mismatched to illiquidity profiles—Franklin focuses on proper product structuring and deep education for RIAs/advisors. (39:14)
  • Dedicated team (including Tony Davidow) provides alternatives education, ensuring that advisors and clients understand liquidity constraints and how private markets work. (43:27)

Notable Quote:
"There are some groups out there that are conducting asset grab ... That's not our approach. We really think about liquidity as an important factor that's playing into what that investor's needs are." – John (40:39)

Career Reflections & Building Trust

• John stresses curiosity, empathy, and building rapport as keys to successful client relationships—moving beyond transactionalism to earn “the license to challenge” clients as a peer.
• Short-term sacrifice (foregoing fast sales) in favor of building trust and long-term win-win partnerships is core to Franklin’s DNA. (50:39)

Notable Quote:
"You got to move away from this transactional mindset ... much more focused on how do we aspire to get into that long term sort of winner's circle of partnership that we think clients are increasingly asking us to do." – John (50:39)

Timestamps for Notable Segments

• [02:17] – Franklin Templeton’s focus in private markets, post-GFC drivers
• [05:47] – Secondaries market explosion and future evolution
• [07:42] – Why low rates drove alternatives growth
• [10:17] – Private markets, volatility laundering & the importance of long-term focus
• [14:44] – The future of private credit, VC, and strategic selection
• [17:40] – Building a $260B private markets portfolio: acquisition philosophy
• [22:04] – What “partnership” means at Franklin Templeton
• [23:36] – Integrating acquisitions while protecting culture and incentives
• [27:10] – Fighting organizational entropy and prioritizing long-termism
• [39:14] – Balancing retail and institutional channels, education challenges
• [43:27] – Franklin’s adviser education approach in alternatives
• [46:58] – Career advice: empathy, listening, and the trusted partner model
• [50:39] – Short-term vs. long-term trade-offs in building client partnerships

Notable Quotes

• “Strategic partnerships mean everything and nothing at all.” – John (22:04)
• “Our job is essentially to represent you to Franklin Templeton versus, versus.” – John (23:07)
• “If you're out there as a boutique, I think it's increasingly becoming challenging to deal with all the operational side of things.” – John (24:03)
• "We're willing again as an organization to make that investment because we do think that that is a better outcome for our clients." – John (51:44)

Conclusion

This wide-ranging episode thoughtfully explores how Franklin Templeton has thrived by embracing long-termism, rigorous strategic focus, and true client partnership. John emphasizes the need for institutional and retail investors to understand private markets' risks and benefits deeply, highlights the firm’s methodical approach to M&A and integration, and offers career wisdom centered on curiosity, empathy, and trust-building. The episode provides a blueprint for what it means to scale thoughtfully in asset management amid rapidly changing market and regulatory landscapes.