Jack Sharry: Thank you for joining us on WealthTech on Deck. This is the podcast where we talk with industry leaders about the future of digital and human advice, much like I do every day with people around the industry. You will be listening in on a conversation with some folks where we talk about empowering advisors, clients, record keepers, and participants to enjoy improved financial outcomes for all. So today, we’re talking with Yaqub Ahmed and Harshendu Bindal from Franklin Templeton. Qub is the head of US investment only division of Franklin Templeton and Harshendu is the managing director and head of digital strategy for… and wealth management at Franklin Templeton. Qub and Harshendu, welcome to WealthTech on Deck. It’s great to have you here.

Yaqub Ahmed: Thanks for having us.

Harshendu Bindal: Thank you.

Jack Sharry: So first Qub. Let me, if you would tell me about your journey into the investment management business and wealth tech. How did you get your start? Please give us a brief highlights tour, if you will, on your journey and how it led to our talking here today.

Yaqub Ahmed: Yeah, sure, Jack, I’ll try to make it somewhat exciting. So, and thank you again for the invite. Appreciate it. So I’ve been in the industry for 25 years, starting to date myself a bit, actually, well over 25 years, coming up on 30 years. And my journey started, I guess with a little bit of a decision to go to school in Boston, I actually grew up in the Midwest in Minnesota. And just getting a little bit personal here, I’m of Indian descent, as is Harshendu, by the way. And my parents really pushed me towards medicine, right, or tech, and it actually did all of my pre med prerequisites, completed those, I even started studying for the MCATs and actually completed those but I wasn’t feeling passionate about it. So sort of looking for a job, wanting to stay in Boston, really fell in love with the city and found financial services. And so, you know, early on in my career, I was working on the record keeping side of the business within an asset management organization. And then the last 20 years or so been focused on defined contribution, insurance sub advisory, and really leading those efforts within asset management organizations. So I’ve been at FT the last 11 years. And you mentioned investment only. So for Franklin Templeton that is the US retirement insurance, sub advisory, and 529 businesses. You know, maybe one observation I’ll just make Jack is, and I don’t mean this in a in a disparaging way. But I see what I’ll call a little bit of institutional arrogance, right from some constituents in the market, whether it’s managers or other providers in the market. And they’re so focused on say, winning the institutional mandate that they become a bit disintermediated from who we’re trying to help so… And by the way, you can do way better if you’re informed on what are the end investors are looking for on the solutions that you’re providing them. So over the years, I’ve just become really passionate about the work we do. And really the difference we’re making for Americans, for US workers, particularly looking through my lens of retirement and insurance solutions. So I guess, you know, thinking back to, you know, my parents and them wanting me to become a doctor, at least I’m supporting financial health, and I guess in the tech game a little bit, which is kind of cool. But I’m not a doctor. And my parents did get a doctor in the family, by the way, through one of my brothers’ wife. So they’re finally happy, and they still have no idea what I do to this day.

Jack Sharry: That’s something we I think we all suffer from, but I hear you loud and clear. So thanks for that. Harshendu, why don’t you do the same? Tell us a little bit about your background and some of the things that you’ve done around the investment and digital wealth management business.

Harshendu Bindal: For me, my journey, as in financial services started close to about 27 odd years back. And I’ve spent the last 24 years within that journey with Franklin Templeton. When I studied, I actually did my computer engineering. And I had no clue that I’d be joining the financial services industry. But I kind of stumbled my way there and have kind of stuck to it. But my engineering and technology background is now coming into play in what I do. So it’s been an interesting journey. I’ve been primarily a business leader on the international side of our business. I joined the firm in India, then relocated and set up our Middle East and then Central Eastern Europe and Africa businesses. I went back to India to head up our business there before about five years back relocating to the US as the head of retail for… the head of retail channel for our international business. And so that, that was an interesting assignment, where I kind of was responsible for establishing strategic partnerships with all of our global financial institutions and other distribution partners on the retail side of our business. And the more I kind of applied myself to the fact that how can we be more strategic with our distribution partners, more and more, the answer kind of came back to looking at technology and wealth solutions. And that really, you know, if we were to be strategic partners, for for the firms that we distribute through, we will have to look beyond investment management expertise, and actually support them in terms of providing them wealth and tech solutions. That was the idea which brought me to my current role, which is the head of digital strategy and wealth management for Franklin Templeton. And we primarily focus on three broad areas in our group, we look at enabling digital or tech enabled distribution for the firm. And this is becoming an important channel, globally, for our firm. The second area we focus on is looking at digital wealth opportunities. And here we look at the overall wealth management value chain and see what are the other opportunities and what are the other lines of businesses that we can operate in beyond investment management. And the third area, which is also quite interesting, for me, personally, is the partnership with the FinTech ecosystem. And here, we look at both commercial partnerships, as well as investments and acquisitions into some of the interesting FinTech opportunities that we see. And so this is what I do personally and, and get excited about delivering to our clients.

Jack Sharry: So we’ll get into some of the detail of that in a moment. What I’d like to do now with with both of you, gentlemen, is, appreciate the perspective on your background and what brought you here today, but I would like to have you each comment and, Qub, we’ll kick it off with you. One of the things we see around the industry, lots of change, lots of mergers, acquisitions, combinations. And of course, Franklin Templeton has been quite active in that regard, the most recent of which is the Legg Mason merger/acquisition, not sure how you characterize it, fill us in. And another one that caught my attention, Harshendu, is the the deal you guys did with AdvisorEngine. I know you work with many different partners, including our company, as well as others that have capabilities and your job is to pull that together. So why don’t you kick it off, why don’t you just talk a little bit about the Franklin Templeton strategy around mergers, acquisitions, how that all works, maybe a little bit more about the Legg integration, as that’s current or ongoing. And Harshendu, then if you’d talk a little bit about some of the tech properties that you guys are affiliated with, so, Qub, why don’t you kick it off?

Yaqub Ahmed: Yeah, sure. You know, Franklin, you know, has got a history, as you noted, of many deals over time, right? So but it’s been, it’s been quiet for larger deals, right? So we had the Templeton deal, we had Mutual, you know more recently, we acquired j2 and then BSP on the asset management side. And then of course, Legg Mason, which we closed on July 31. So I’ll focus there and then I’ll let Harshendu focus on AdvisorEngine. You know, we’re always looking for fit, right? When we’re when we’re looking at acquisitions, particularly large ones we’re bringing people in, there has to be cultural alignment. And that’s a number one on the list. And then it’s simple math on product scalability, is… do the numbers add up, is it a complementary business? So as we went down that checklist, Legg Mason was just an exciting opportunity. And by the way, we have an extremely strong balance sheet, and we have over the years where we carry a lot of cash. And so as a result, we look at every single deal that comes through the door, we have a fairly new CFO in Matt, Matthew Nicholls, that came over to the organization, I guess, Harshendu, has it been about 13 months now that Matt’s been on board, he led the fig investment banking organization globally, and a large investment bank based out in New York City. So he came over for a very specific purpose. And he executed on that. And so Legg Mason was, again, the deal was closed on July 31. And by the way, the entire deal and the integration process was done virtually. So I’m fairly certain that there’s going to be a bunch of business school case studies on transactions done during this COVID environment. And we also closed a couple of months ahead of schedule. I think the fact that we weren’t running around on planes, we were saddled to our chairs in our homes, we move things along very efficiently. So maybe just three quick things I’ll highlight on the deal itself is one, we’ve got significant scale, right? We’re now the sixth largest independent asset manager with 1.5 trillion of AUM. So in this competitive market of decompressions, scale matters. It’s not the primary reason of any deal we do, but it’s certainly an important aspect of the deal. And then two, this was a growth transaction for FT. It wasn’t focused on expense synergies, we are pulling obviously expenses out, I think we’re, we have a target of $300 million of expenses that we’re pulling out of the total operating budget. But if you look at that in the context of what the budget structure is, that it’s a percentage, it’s 8%, right. And what we’re actually doing is reinvesting a lot of the savings back into the business and into the people. And as a result, obviously, I’m a little bit biased. But we’ve developed and created a very strong organization with highly complementary strength, investment capabilities, products, distribution, and people just on the client facing side. And when we talk about some of these new disruptive technologies that we’re bringing to the market, we’re going to need these client facing folks out in the market. We have 250 client based individuals just in the US region, the DC and insurance business is about 20% of our total US flows in AUM. So, so we have a very healthy and stable long only business. But in parallel, we’re also focused on how we can creatively disrupt and decommoditize our business, but do it in collaboration with our strategic partners. Strategic investments, you know, working with firms like LifeYield, by the way. As well as them M&A. And so, you know, innovation’s in our blood, I think it’s, it’s frankly, driven from our CEO, Jenny Johnson, she empowers every single associate to think creatively. And what she says a lot is just because something has been done a certain way doesn’t mean it has to… it shouldn’t be challenged. And I think that’s even more critical when you have two large organizations coming together like we are. So to answer your questions, it was certainly an acquisition, but it’s really treated as a merger of equals. And it was a very balanced approach as we brought the firms together. And then lastly, you know, again, this was, we did have the financial strength to pull this off, it was an all cash deal, we still maintain a strong balance sheet with significant cash. And we’re not looking for another big acquisition of the traditional asset management side, but we’re going to continue to invest in businesses like FinTech and digital wealth. And I would say, you know, very objectively speaking, this is the one area, when I look at our two organizations, we had a significant lead on. The businesses again, were very complimentary, they had strength in certain areas and products and people and distribution, and we did as well. But the digital wealth area was an area that we stood out. And we added resources and commitment to this business as Harshendu talked about. So I’ll pivot over to him since he’s… has leadership on that organization, you could talk a little bit about AdvisorEngine.

Jack Sharry: Harshendu, I’m curious, because you not only have AdvisorEngine, but many other affiliations that I read about in the press, why don’t you just talk about your strategy there. You mentioned about the importance of the strategic nature of digital wealth. So talk to me if you will about that, broadly, and then maybe specifically as well.

Harshendu Bindal: What we, at Franklin, Templeton believe is that we can help clients, our clients achieve better outcomes through not only investment management expertise, but also wealth management and technology solutions. This is the thought process that is driving what we did with AdvisorEngine and that acquisition and some of the other initiatives that we have on the digital wealth side. You know, in order to kind of deliver holistic solutions to our clients, you know, technology will play an important role for us. And what the technology allows us to do is provide the solutions or our investment IP into the advisors’ workflow and onto their desktops. And this is going to be important we feel as asset managers deliver their capabilities and move away from just product sales, or just investment sales into the kind of solutions that I’m talking about. And so a lot of what we do and what we plan to do with AdvisorEngine comes from that thought process. We think with… through these digital solutions, not only do you get, you know, the ability to deliver holistic solutions, and I’ll give you a couple of examples where what I mean about holistic solutions, that instead of offering just our model portfolios, we are able to offer goals based wealth management as a solution to our clients where we are helping them with providing the advice that is required to be provided in those solutions, and linking the client goals to the investment choices that they make. So this is an example of a holistic solution or in the past we would have provided maybe an income fund to solve the income needs of our clients. But now more and more as we look to solve for retirement income, again, we will be looking at offering holistic solutions that provide not only product solution wins, but also abilities like, you know, tax location or Social Security optimization or tax efficient withdrawals, which in some cases, we would partner with organizations such as LifeYield to deliver those holistic solutions, right. So this is the kind of world we want to build to. And that’s where these acquisitions and these investments help. Of course, another point I would like to add is that it also gives Franklin Templeton an opportunity to play a bigger role in the overall wealth management value chain. And also monetize a bigger piece of the wealth management value chain. And so this is some of the thought process that is driving our investments in this area.

Jack Sharry: That’s great. We have about 10 more questions, but we have not enough time for me to go into every every bit of it. So we will shift to our near last question. If you guys would share your thoughts on where this business of ours is heading. I know, Qub, you’re more on the investment management side directly and Harshendu, more about the enablement around digital. So if we could kick it off with the Harshendu, if you’d talk a little bit about where you see things going from a digital standpoint, that would be great.

Harshendu Bindal: So one, one of the things we believe is that advisors are being asked to do more, and they’re moving from being just portfolio managers to financial life coaches for their clients. And we believe that their focus needs to be on their clients and their outcomes and provide for the unique nuanced needs that clients require of them. Much of that today is accomplished by humans. Where Franklin Templeton, or I think the other asset management industry players will come in is by assisting the advisors by providing them the tools, capabilities, and expertise that will help them in this transition. What we want to do is help this process by intelligently automating what deserves to be automated. So examples are like portfolio construction, portfolio optimization, rebalancing capabilities, and bringing various solutions to advisors, which I talked about previously, such as goals based wealth management, retirement income, or portfolio construction solutions, and the like. Also, I think, investment managers will play a key role in advising the advisor. They can provide their unique perspectives that help advisors uncover opportunity and sources of risk and help them to have better conversations with their clients. We see this as especially true in volatile markets, where there can be a significant drawdown event may occur. And I mean, the COVID in March 2020 is an example really, and investment managers I think will need to scale the analytics capabilities to provide more powerful services to advisors to help them build better portfolios, and to be prepared for the various micro and macro triggers that may be rocking their clients’ financial boats. So I think this is how asset managers will stay relevant to advisors in the next several years, and really allowing advisors to focus on sales and organic growth. Also, another area I would like to highlight is the growth of the independent and RIA channels, where many advisors may or may not have the benefit of home office capabilities. And I see asset managers, at least the forward looking ones stepping up to fill that void. And what we can do is bring a unique IP and our digital capabilities can provide, again, entire monolithic solutions for advisors. Just as an example, we talked about AdvisorEngine, and the case of AdvisorEngine is one such example of what I was talking about. We can augment what advisors are currently doing. I think more and more over the coming years, everything will be in a single place. Whatever asset managers build on the digital side will have to fit into existing advisor workflows and platforms. And digital solutions from asset managers need to be flexible and easy to integrate, or I don’t think they will be able to stand on their own. And so there is a lot of investment that’s being made in this area. And I think asset managers can work very closely with advisors as they make the transition to their practices.

Jack Sharry: That’s great, thank you. And, Qyb, why don’t you give your prognostication on where the world heads over the coming three to five years?

Yaqub Ahmed: Yeah, so I would just say, listen, it’s moving very fast, Jack, right? It’s, it’s… So I’ve never seen a moment in my career where things are this fluid, it’s just moving at an unprecedented pace. So we’re gonna see a lot of transformation, it’s going to be significant just over the next three to five years. So I tend to stay and we, as an organization stay focused on globally consistent trends, secular shifts in the market that will inform our thinking. And these will be of no surprise, by the way, and again, looking through a little bit of the insurance and retirement and investment management lens, aging demographics, the need for a demand for workplace financial wellness, particularly in the US, and ultimately the impact of data and technology. And I just look at developed countries, and particularly in the US the the impact of legislation. And obviously, the global impact of the COVID pandemic, as Harshendu alluded to, really accelerated these trends. And I, I am optimistic and hopeful that we’ll still have sound public policy to allow the private sector to do what they do best. But when I look out three to five years, I see kind of three big shifts that asset managers can rally around. One is, and Harshendu has alluded to this, is a world of financial personalizations. I always look to the retail tech leaders, right? So and I do this myself. So investors, I think, benchmark our industry against consumer tech leaders like Netflix and Amazon, not really our peers, right? So Netflix somehow knows what I want to watch. And that may or may not be how they found out I enjoy… would enjoy Virgin River, by the way, which I do, and did. Got through that pretty quickly. But the world, you know, when I look at the world, we just don’t need more products. We need better technology platforms and integration, as Harshendu talked about. We need better holistic advice and personalized goals based products and services. So I think about the connection points between robo advisory wellness and financial planning and these things not operating in silos in order to provide a holistic financial journey for, for investors and their households. Two, and this is where we’re really centered moving forward, particularly in the retirement and insurance space, is we strongly believe, and I think you see this is the workplace is becoming the financial epicenter for the majority of Americans. We think there’s a great opportunity for asset managers in the financial services industry to support plan sponsors, and provide more US workers access to things like financial wellness, but also advice. We need to leverage tech and data delivered in an efficient and scalable way. There is this mass underserved market of the population that, let’s just face it, historically just hasn’t been attracted to the financial services industry. But they need help, I need to find a better term for this. I think underserved market is a little bit better. But I often call the two camps hunted versus the ignored. You know, financial advisors in the wealth management industry are very focused on those with wealth. But there’s Americans out there that are asking for help. So we actually charted a poll study with, with Harris Polling, and three out of four US workers are explicitly asking for help. They’re asking their employers to optimize their financial well being and provide better tools and resources. And a term that has often come up, by the way, as opposed to retirement planning is to achieve financial independence. So listen, I think first and foremost, we need to get workers to be better savers, and Americans to be better savers, then we can convert them to investors. And tech allows us to do that in a more scalable and in an efficient manner that that we can easily monetize as well. And then lastly, the big thing I see is, I see a lot of collaboration in the industry. You know, we’re an asset manager, we don’t have an insurance charter as an example, we believe in guaranteed retirement income as a part of someone’s retirement income journey and needs. But I think you’ll see asset managers working with other asset managers, insurance firms, with record keepers, certainly in wealth management firms, and with FinTech firms, and we need to get better access to retirement plans, there’s obviously a coverage issue. Again, we need to give actual advice to people. They’re looking for it, they need access to it. And then sustainable retirement income. And by the way, I listened to your podcast recently with with Ed Murphy with Empower, and they’re an important partner of ours and their strategic priorities are very much in alignment with ours. So when I think about two, our two organizations just as an example, and our combined resources, and then you think about the broader industry collaboration, that’s how you take one plus one, and you get to three pretty quickly. So that’s why I see this thing really accelerating over the next three to five years, just over the last 12 months, we’ve had significant conversations with all of those constituents within the financial services ecosystem, and having really exciting conversation of what the future is going to look like.

Jack Sharry: Well, I couldn’t agree more. One of the things that’s been fun about doing this podcast I get to talk to people like you guys, and Ed Murphy and many others, and everyone has a different take but sort of the same view that it is about the confluence of what I call digital and human advice and how that comes together. As we look to close here, Harshendu, if you would, maybe give us your crystal ball, where is this all headed, what’s, what are some takeaways that we want to be mindful of as, as we look out and ahead, and you’re at the epicenter, at least at your firm, if not the industry, around how this all comes together, certainly on the digital and human advice aspects around wealth management. So if you’d share your, your point of view on where all this leads.

Harshendu Bindal: So, you know, I’ve talked a lot about digital and wealth and technology, really, but at the core of it, I continue to believe that this is going to be a human plus machine business. I think advisors are not going away, they’re just evolving. And we see them be more and more financial life coaches to their clients. And as an asset management industry, I think we need to understand and build for that transition, everybody’s financial situation is getting more complicated. So that’s one. I also think from the advisor side of things, they should consider outsourcing for those parts of their businesses, where they either feel they don’t have the expertise or passion. And here, you know, they should let the technology run the business. And advisors can provide what I think is more important, which is the human overlay, focusing on clients and prospecting. And really, it’s about advisors leveraging what is out there. So that, for me is the second point. And I would also like to highlight the point that you made about personalization. I think advisors should leverage up and coming capabilities that are delivering personalization. I think we’re getting to a point where we can actually deliver to individualize client biases at scale. And this will really show the true value of the advisor. And the move away from standardized model portfolios, I think is coming fast, and for which advisors need to be prepared. And for those advisors that are starting out, or recently independent, we feel cloud native technologies have leveled the playing field at a fraction of the cost of historic solutions. So you can get a lot of scale and efficiency if you look at a lot of the solutions that are out there. So, so for me, these are some of my thoughts as I look to the future.

Jack Sharry: That’s great. Well, thank you both. This has been a wonderful conversation, I have one last question for each of you. And this is off the topic of work and what you guys do for fun, or what people who know you through work may find interesting or surprising, even. So, Qub, we’ll start with you. What, what do you do that others may not know about that you’re particularly passionate about or enjoy when you’re not doing your day job?

Yaqub Ahmed: Yeah. So, Jack, likewise, by the way, thank you so much for having us. So I guess I categorize myself as a fairly run of the mill dad, at least nowadays. We have three active boys that we’re raising with my wife, Caroline, and a couple of them are teenagers. So it’s pretty busy around here. I’d say the silver lining, honestly, this last, you know, 14 or 15 months is that I’m home. You know, it’s… at one point, you know, first few months in, I think one of my kids asked me why I was there. Once we got past that, you know, I got to do normal dad stuff, you know, like driving them to school when they got back into school and being home for dinner and coaching their teams and whatnot. So that’s been really cool. One fun fact about me, I guess. So, I mentioned I grew up in Minnesota. So I have a 30 year plus, it’s about 35 year streak now, of not missing one Vikings game. Preseason not included. And on TV, not in person, need to clarify that. I haven’t lived in Minnesota since I was 18. So, but I have not missed a game in over 35 years and I’m actually a season ticket holder now. And I’ll probably get to, you know, get to two to three games a year. But you know, the way I look at it, Jack, and I know you’re a Bostonian, but if 20 years in Boston doesn’t break the streak, nothing will. It’s probably a little bit more about the streak than the love of my Vikings at this point, clearly. They haven’t won anything, so.

Jack Sharry: Good for you. That’s loyalty. How about you?

Harshendu Bindal: So like Qub, you know, I live with my wife and two boys in California. My elder one is a high schooler who’s about to start college in the fall and my younger one is a middle schooler, who will start high school again in fall. And like Qub, they’ve not figured out that I am with them 24/7 for the last one year. So but unlike Qub’s kids, I think my boys have still not figured out what I do around the house, or what I do for work. But keeping all of that aside, I think, really, from the time that I can get, you know, kind of get away from work and spending time with family, when we moved into California about five years back, one of the things that we got was we inherited a small vineyard with a house. And so I started kind of getting into producing my own wine. What started as an interest, I think, grew… has grown into a hobby, and is now becoming a passion, as I’ve been doing that for the past few years. And I’ve actually got to a point, and I never thought I would say this, I’ve got more interested in producing wine than drinking it. So I hope to continue to grow over the time. And yeah, I look forward to sharing some of my wine with both Qub and you when you, when you guys can make it to California.

Jack Sharry: It’s a deal. It’s a deal. Well, thank you both. This has been a lot of fun, really appreciate your time and perspective. Thank you both for being on our podcast and we look forward to the next time we have a chance to to meet and maybe we’ll have some of that wine, Harshendu, sooner than later hopefully. So thank you both.

Yaqub Ahmed: Thank you.

Harshendu Bindal: My pleasure to be here.