Jack Sharry: Thanks for joining us for this week’s edition of WealthTech on Deck, we have the good fortune of speaking with our guests who are blazing the trail as to how advice and guidance is being enhanced and improved over time. We often talk about investment and annuity products and the technologies that make for a better operational flow and are leveraged to improve financial outcomes and user experience for investors, participants, advisors and firms. Today we will speak with someone who is a leader in one of the most innovative firms today in our industry, least in my opinion, as I wrote my monthly column in financial advisor magazine at the end of last year, in an article entitled, who will become the Amazon of financial advice, identified Morgan Stanley, Edward Jones, empower and Franklin Templeton, as the current leaders entering that mantle. Some pushback on my selections, but if you read the article, you’ll find each of these firms is connecting the dots between wealth management and workplace retirement, digital and human advice and making for a better experience and financial outcomes across the board. Today we will speak with Yaqub Ahmed. Qub heads the US investment only business at Franklin Templeton which includes their retirement insurance, sub advisory and 529 businesses. Qub, welcome back to WealthTech on Deck.

Yaqub Ahmed: Yeah, thanks for having me, Jack. Appreciate it.

Jack Sharry: So Qub, I’m a student and a big fan of what your CEO Jenny Johnson has been doing at Franklin Templeton, between acquisitions investments in technology and the development of advanced systems for making working with Franklin Templeton so compelling. There has been an incredible amount of positive change in Franklin Templeton, and some who have not kept up might find it surprising that I would identify your firm as one of the most innovative in our industry. Let’s set the table for our audience with you describing what’s been going on at Franklin Templeton, what would lead many observers to agree with my assessment?

Yaqub Ahmed: Yeah, well, I need to find out who’s pushing back on that list. I agree with you. There’s a lot going on. I mean, listen, I am a huge fan of Jenny’s as well, I think about everything going on in the industry right now. And she’s leading us through some incredible change and disruption that we’re all well aware of in this industry. It’s interesting, we’re coming up on we just celebrated our 75th anniversary of Franklin Templeton and it’s changed more, in just the three and a half years that Jenny took the helm than it did in the prior 20 years. I’ve been at the firm 13 years, it’s just experienced a lot of change. You know, the way I look at it, and the way I think Jenny views at an executive committee is the industry is obviously changing very, very fast. It’s evolving quickly. Franklin, I think is staying way ahead of that and identifying blind spots, but also identifying areas of opportunity. Just from a sizing and skills perspective, we’ve actually doubled in size in just the last few years. And that’s been primarily through acquisitions. Right. So we’ve made either eight acquisitions over the last three years. And it’s not just the size, it’s the type of firms and capabilities and solutions that we’re acquiring and people that are really enhancing our value proposition to our clients. So and we really looked through the lens of how do we improve client outcomes, and that client can be an institutional investor, it can be retail investor, it can be any type of investor, but that’s really our guideposts in our compass. And the areas that we’ve been focused on. One is alternatives. That’s not been a secret in the marketplace. So we’ve expanded our alternatives platform significantly, just over the last five years. So when, five years ago, we maybe had 13 billion or so and alternative assets. Today, we have 260 billion. So we’re the seventh largest alternative investments manager. Yeah, it’s mind blowing, really, and the capabilities that we offer quite impressive, too. We’re focused on personalization and customization. Everybody talks a lot about the Netflix and in the personalization of advice, we’re very focused on that. We’ve talked in the past about go our goals optimization engine, so we have a proprietary algorithm. We do recognize that you have to you have to power those through scalable technology as well. So we’re busy doing that we’ve also acquired capability like direct indexing through a Shaughnessy asset management. So we’re very focused on customization and personalization. Three, you know, you talk a lot about FinTech on your show. And I think because we have this unique, I’ll call it an advantage because we’re based in Silicon Valley, right? So, you know, we’re in the heart of technology. And you know, FinTech certainly, we have an incubator on our campus in San Mateo that you may be aware of, so we have small firms and startups that take residence and we think we have a firms that are taking residency right now. And we couple that with a very robust digital wealth team, you’ve had our Shinzou on with your show with me in the past you’ve had a gentleman. And you’ve had rod on from our Fiduciary Trust organization on the digital side. So we’ve got this robust digital wealth team that we partner with Rich Cancro. We all said Rich Cancro.

Jack Sharry: Listen, yeah, it’s, it is a big part of the overall business. So it’s, you know, it’s very much a big part of the strategy, right, because we have a large share of the total assets within the US region, which I’m responsible for, you know, when I think about our business, and I think, you know, down to the investor level, what we’re trying to solve for, we’re solving for some of the biggest financial planning needs for US workers, or households, and individuals across wealth management, across retirement. And those things, those goals are saving for retirement, saving for education, and protecting those savings as well. So those are really the three dimensions that we think about with our business, all within the spirit of really gaining financial independence for individuals in those households. And we think these three areas are important pillars to achieving that, you know, the areas that we’re focused on, they very much overlap with some of the things I talked about, you know, one, we’re a huge fan and advocate of personalization. I always from a retirement perspective, I always use this as a data point, Jack, I look at target date funds, and by the way, I’m not knocking target date funds. I think they’ve done incredible good for the industry. They’ve gotten people in invested they’ve got better participation and savings rates and retirement plans. That’s unprecedented. And we’re using things like auto enrolment, to increase participation. It’s been great. And target aids of course are the biggest benefactor of that but when I look at particularly older participants, and I’ll put myself in the older category because I’m now 50.

Jack Sharry: Yikes, that’s pretty young.

Yaqub Ahmed: I live in in Florida, by the way, I think its slowed down my aging process. I feel younger every day. Yeah, it’s somewhat unusual for an asset manager, we’re the largest asset managers in the world, in Franklin Templeton to be in the advice business. That’s what wealth managers do.

Jack Sharry: So if you would. I know. Well, we’ve talked a lot about this, we’re working with you guys talk about that. And in terms of what you’re doing with firms like AdvisorEngine, which is part of now part of Franklin Templeton and with go and what that is maybe describe that a bit. And then what you’re also doing with firms like vest well, in terms of being in the advice business, yet not having that operating as a large wealth manager, but yet impacting that. So describe how that all comes together. It’s pretty fascinating story.

Yaqub Ahmed: Yeah, again, I think there’s a major advice gap. I think the advice algorithm that we have goals, optimization engine is a goals-based advice. So it’s responsive, it’s based on data, it’s based on very specific goals that carry different levels of risk as for that reason, and so, you know, as a as an asset manager, there’s still a responsibility to provide informed solutions. And so, you know, we still rely on our clients, we rely on wealth managers rely on fiduciaries and advice providers to provide that ultimate advice. But in order to scale it out for different segments of the market, and in order for our clients to leverage and that’s really what it’s all about. This isn’t about Franklin Templeton going out aggressively in the direct to consumer market and disintermediating our clients. This is about equipping our clients with the tools and resources like advisor engine that has the advice algo fully integrated into it, a full service Robo for our, you know, Ras to use in their marketplace, maybe not for all their clients, but for a segment of their clients. And that’s how you help solve for some of these advice gaps. I look at the workplace, you know, from a retirement perspective, we think the workplace is the new financial epicenter for most US workers, right. And that’s where you can clearly look through the lens. And you talked a little bit to Jackie about this. When you look through that lens, and you apply that hunted versus ignored analogy. 90% of US workers don’t have access to advice. So how can they deliver that you can deliver that through the workplace through scalable Robo technology, whether it’s through a managed account inside of the 401 K plan, or through integrated ecosystems that are made available to the workers within those employers. And again, we don’t want to be the one selling those directly to those employers, we would rely on our intermediary distribution to get that out to market and use them as a leverage point and equip them to be able to harness that and bring it to their clients. You know, Jenny’s used this analogy before, by the way, which is, you know, when Turbo Tax came out, it was like the depth of the account. You’ve seen headlines, the death of the broker. This isn’t about that, you know, TurboTax ended up really enabling accountants to work with more people. Elon have more holistic deeper kind of financial partnerships with their clients. And that’s what this is really about. And that’s what you’ve seen with wealth managers to write wealth managers that become financial planners. And we’re simply trying to democratize financial advice and financial planning on behalf of our clients.

Jack Sharry: It’s fascinating to watch. If you were to tell me 510 years ago, that Franklin Templeton would have something like an advisor engine would have relationships with a variety of different advice providers in the workplace marketplace. It’s like, what do you talk about? They don’t they do income funds. I mean, it was a whole different way of looking at it. Yeah. And now you’ve incubators, incubation labs on your campus, you’re kind of looking at all the different ways to render advice. And always, by the way, with a human attached to it seems you’re not looking to do away with the advisor, you’re looking to enhance their capabilities. Isn’t that the case?

Yaqub Ahmed: That’s exactly it. You said it perfectly, Jack.

Jack Sharry: That’s great. So it’s fun to watch, I’ve been a big fan of what you guys are doing talk a little bit if you would about Goals Optimization Engine and how that plays just that interplay between what an AdvisorEngine which is basically a full service Robo hitter term. I love it either. They do so much. And it’s full service. But I’m come up with a better but it’s always within advisable to come up with some other fancy name, which I can’t recall at the moment. But anyway, the point is that you’re taking what Rich Cancro, his team have built lots of capabilities, and just enabled advisors to be more available for advice. And then that’s kind of the wealth side, wealth management side. And then on the flip side, you do a lot of work with advisors, Vestwell happens to be an example. But I’m sure there are many others that are working on the workplace. That’s another sort of trend that we’re seeing across the industry of that confluence of wealth and workplace for those who are coming together. And, and what you’re doing with the goals optimization engine is to enable both sides to be really served the client as one, in other words, provide advice across qualified non-qualified accounts, different types of products, annuities, all the rest of it. So really a more holistic kind of approach, maybe talk a little bit about how that all works.

Yaqub Ahmed: Yeah, so we’re taking the advice algorithm, which by the way, it’s backed by Harry Markowitz Award, which we won in 2018. So it’s got this award winning research. And we took this academic research and created took this and created an advice algorithm based on that. So it’s probability driven, it’s based on the probability of that goal. And that drives the actual asset allocation. So it’s based on probability driven algorithm. It’s personalized based on actual data at that point in time and other assets, and it’s responsive to the market. So you know, if the market changes, it’s going to respond to that if the goal changes, right, there’s going to be different levels of risk for goals. So if you need to buy a car versus, you know, young person saving for retirement has a different investment time horizon, you’re probably going to be more invested in equities, and it recognizes the different risk tolerances based on those bucketed goals. But it all does it in a scalable way. And that’s why we’re looking for technology partners in order to integrate and then bring it to market in a kind of digital scalable, tech enabled way. Vestwell is a perfect example of how we’re doing that in the workplace. And that was a unique deployment, I would say, you know, Vestwell has their niche in the market, they’ve done incredibly well in that niche of the market. We think the possibilities are endless with them. Normally, the way we bring our advice to employers in the workplace would be through a managed account technology, right? Leveraging that middleware, and bringing that to market with the best well, you know, they’re a tech firm, right? And they said to us, why don’t we just integrate it directly into the tech stack, and me not being a technologist was like, what like, don’t you need, like now we’ll just, we’ll just integrate it in and remove that layer of friction cost and create additional efficiencies. And that’s exactly what it’s done. So it’s now the default, if you will manage to count, if you will solution with invest well, so if you’re looking for a managed device, you’re using the goals optimization engine, advice, algo with as well. And the other thing that they’ve done, which I think is important longer term for, you know, I do think things need to be more personalized in the retirement space, full stop. They’re actually using it as a default as opposed to a target date. Right? That’s what they lead with. So if you’re looking for your qualified default investment alternative, you’re actually if you using the best well solution, you’re actually using the goals optimization engine, so you’re personalized on day one, and mapped into a personalized portfolio that really feeds off the core menu of the 401k lineup. So that’s how we’re bringing it to market but we’re also thinking above and beyond that, you know, it’s the 401k’s one major spoke in the wheel, but we’re also again, thinking about the workplace as a new financial epicenter. How can we create more of an integrated ecosystem that thinks about everything, not just the 401k. But you know, based on the based on your needs, can it provide informed advice around an emergency savings account your need for a 529 account, identify those things, give advice and guidance on actual solutions that bring those two individuals and households, again, to people that don’t have that necessarily have access to advice.

Jack Sharry: It’s exciting times. I agree with you on the workplace retirement business is really, really has helped people get started in availing themselves of financial services. And those in time I’m sure is on your roadmap, I’m confident it is that you’ll be able to connect to the taxable side, and then there’s an arbitrage between the tax qualified and the taxable, and you have better outcomes, because if you address taxes, then you’re better off. So all that I gather is in your future. But that may not be ready for primetime just yet, but be on the lookout, those of you who are wondering if we’re Franklin is innovative. They are for sure.

Yaqub Ahmed: Yeah. And we’re you know, we’re focused on strategic partnerships and collaboration. And, you know, Franklin, we know who we are, as well, as much as we’re innovating in the new capabilities we’re bringing to market, we can’t be all things to all people. So it requires a high level of collaboration with the right partners to bring some of these solutions to bear.

Jack Sharry: We are proud to say we are one. Thank you. This has been a great conversation. As we look to wrap up, what are three key takeaways you’d like to share with our audience.

Yaqub Ahmed: So the three things that we think about a lot, and Jenny talks about this a lot, too, is number one is adaptability and agility, it’s critical in order to have success, there is so much going on. It’s an incredibly fluid market, I think about whether you’re navigating the regulatory environment, the economic environment, or just the competitive landscape, you need to be able to be responsive and agile to and I just mentioned this as strategic partnerships and alliances. You know, when I look at how we create leverage growth within our business model, it’s by identifying strategic partnerships that will help us leverage those and take them to the next level and find new markets for distribution and find partners that will help us identify new client bases, and new revenue streams, things like integrated ecosystems. And then three is I always remember why we do this. Right? And, you know, not to keep bringing up Jenny, but you know, Jenny, she has, none of her kids are in the business, right? And one of her kids said, you know, Mom, I want to be more kind of purpose based, work you know do something that actually helps people. And she was like, we do help people, you know, and and I think that every day like, I remember why we do what we do in its most fundamental sense is we do help people, you know, the retirement side, retire with dignity, we help protect those assets, we help them with their college savings. These are some of the most basic financial planning needs of every US worker, every household, an individual in this country. So those are the three things that I tried to keep top of mind.

Jack Sharry: That’s great. Final question, as we do with each of our podcasts. My favorite question we ask our guests at this point is what do you do outside of work that you are excited or passionate about? People might find interesting or surprising.

Yaqub Ahmed: Yeah, you know, so little people know this about me, because you’ll hear my name. You call me Qub. And this is actually where I got my nickname from was. I grew up in this. My parents are immigrants from India. But I grew up in a very small community, a farm town in southwestern Minnesota, near Iowa and South Dakota. So people are always surprised to hear I grew up near a farm in a farming town. My two best friends from back then are still my two best friends today ones in fact my brother in law. But my time in Minnesota, and I, of course, moved to Boston went to school there. It’s been 20 years there now in Florida. But to this day, I have still not missed a Minnesota Vikings game for the last 35 plus years, I’ve actually stopped counting because it’s almost embarrassing. how long my streak has lasted and all without a Super Bowl, by the way, so I started following them. They’ve been in four Super Bowls. But they’re all in the early set early to mid 70s. I became a fan in 1978. So I’ve yet to even see them in a Super Bowl, win or lose. So but I’m holding on to this. It’s more about the streak at this point. You know,

Jack Sharry: I’m with ya, I’m with ya. I think they call that loyalty or something. So good. Thanks. This has been great. appreciate your sharing your thoughts and perspective. Franklin is an impressive firm. You guys are doing great stuff more to come for our audience. If you’ve enjoyed our podcast, please rate review, subscribe and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Thanks again Qub. It’s been a real pleasure.

Yaqub Ahmed: Thanks, Jack. Appreciate your time.