Franklin Resources (BEN) 3 May 222022 Q2 Earnings call transcript

Welcome to Franklin Resources Earnings Conference Call for the Two Quarter and Fiscal Year 2022. Hello. My name is Grace and I'll be your call operator today.

As a reminder this conference is being recorded. And at this time, all participants are in a listen-only mode. to Head conference Franklin of like host, to Resources. now Oh, Selene Investor would turn over the your I Relations for

You may begin.

cause and discuss number within Franklin the Act the could forward-looking expressed in Resources risks, other thank described us actual other results which Litigation and are unknown and Securities made Factors to and important Reform These for or differ Inc., of of forward-looking Risk this our and forward-looking materially statements important including the XX-K XX-Q historical MD&A filings. to the Securities and just statements with from are on more regarding morning, These Franklin's any Exchange Commission detail Statements or sections meaning and quarterly involve future by of that and results call Good conference known XXXX. of factors uncertainties not in implied other Franklin's in Form a results. the most you uncertainties risks, statements. today filings such recent factors recent joining Private

turn to the over Johnson, our to like President Officer. and I'd Now, Jenny Chief Executive call

Thank you us to our expanded Adam our his for Franklin Chief Officer; and everyone include today Operating Matt for you Head I'm and second Spector, Templeton's CFO, joining results joined quarter. who Distribution. recently Hello, discuss fiscal of by Salene. our thank Nicholls, responsibilities Global to

the economic by financial significantly from of a been inflation pressures impacted which of Russia-Ukraine resulting both and war. markets related shifts by to global rates, and were geopolitical exacerbated This interest quarter increased continuation due higher macroeconomic have

made inflows billion taxable had key challenged volatility the strategies. and several growth and over industry This a by were of through the effective long-term heightened The rapidly we business drive outflows, diversify income our areas quarter's we've all of fixed although market our $XX.X better us net these net implications clients investments to importance investment conditions. We years to environment to pressures continue volatile our flows fee rate particularly into impacted remind remains of the stable. market environment in and serve in changing market past

Our investment at deep a investment provide specialization. expertise and lens through each different to look market the teams

For saw income managers look Fixed interest and Income, Franklin at different our specialist resulting you loans instance, Brandywine into has taxable these were Western in and outcomes we Global, a investment and net if varying bank US And those Global investment our franchise, short each fixed strategies. Templeton in strategies duration corporate across inflows by offset global of rate Templeton Asset outlook, products. certain although outflows Macro partially

we've investors classes. been asset to to in search reposition yield able look as for benefit across portfolios their Additionally,

important BSP flagship for Clarion represent assets reached have and in our clients. and income management. quarter generated during success fund a asset second Clarion strategies Partners and example, Our tools of our key $X under record Partners, been long-term and each net for the billion Street in highs and inflows Benefit alternative diversification to combined contributors

our for illustrate Asia from the AUM, flows driven other approach $XX diversify to uncertainty periods in investors vehicle Income the and AUM. of their our Close recently to inflows conditions the average Our during billion look to an as funds and client our goals. that outside multi-asset Fund $X with clients with quarter, able XX into funds Templeton financial decisions geopolitical extremely SMA Institute we've to we've net to increased reposition long-term also with of has navigate and their engaging macroeconomic help has and been with market customers US meet investment XX top our impact seen interest in managers portfolios important and how shifts launched adjustable of was the our now net income thought strategies is investors To into exceed Europe strategy Franklin their billion is specialist market been actively in investment the $X.X largest and on demand. are class fund by XX recorded changing positive in category and with Franklin that how leadership connectivity billion

Specifically, attendance by and second by by webinar views advisers grew the financial XX% increased video quarter in XX%.

performance a XX-year performance. strategy in our three, There Turning resulted performance was Templeton their strategies Global strong in in period. performance which offset due global whose composite XX% a Bond was certain improvements benchmarks partially investment our strategies taxable in long-term for income five the Strong and the investment income one-year notable decile performance one-year of Fund top to respective to fixed AUM by XX% and with period. fixed in outperforming XX%, US decrease for investment over performance primarily is

in progress corporate advancing expanding We assets, wealth ETFs. our and growing customize alternative technology in continue which to include make presence SMAs and on our management initiatives, portfolios our to

further quarter billion. an a billion importance assets, both at new in growing strategies the to a SMA will in increasing Our the its contributions reporting starting to investors. quarter from AUM develop billion the billion net of including X.X% continues we presence quarter XX% be including included of inflows acquisition to alternative of a as alternative by When group alternatives That $XXX Templeton $X XX. fundraising. of Franklin of March expect X, into Partners Lexington, with individual completed total with secondary Benefit $XXX $XXX.X our diverse and leading we ended result asset and billion prior institutional Street increased record a become AUM manager Partners aforementioned from for Lexington funds equity our a quarterly area of co-investment $XX of growth as and of third in Clarion AUM Partners. of in On AUM and private global April the manager business

customize make We with to to SMA technology use in particularly of continued progress strategies portfolios.

Trust ended and our in partnerships the of acquisitions. custom million AUM via XX%. positive its net of acquired to $XXX quarter generated quarter Canvas consecutive continue grew Fiduciary by recently sixth of quarter number $XX.X net business by International to of the solution long-term and the inflows XX% billion. by indexing driven This increased accelerate we Wealth ways explore Management at AUM inflows growth

also actively the balanced flows in quarter growth ETF and in are net billion managed between in with AUM, positive which approximately and We passive experienced business our $XX strategies.

and In fee consistent of confidence would performance Looking in the business investments our With our of rate the adjusted basis ongoing billion strength Adjusted and and days in income adjusted included briefly had and at operating we're an non-recurring ever-evolving calendar our industry. for as $X.X geopolitical time it's $X.X not X% points. or additional were relatively items were balance $XXX been million, Expenses billion stayed results, the economic a tensions appropriately effective and episodic present industry, positioned financial cash primarily importantly, flat the of March transformative adjusted make uncertainties. quarter-over-quarter, in invest two but are decrease in our in average quarter, sheet enables complexities decrease AUM to a prior sure revenues XX, results. it have management lower at lower fewer that been closing, us with from asset the in XX.X a fees. climate to certain while was and due

to provide this on broad would expand allowing strides and we've thank navigate made specialization. with their two that significant I and for of our Over our the diversity like is current years, ongoing capabilities our through us clients. It's volatility. to employees tireless clients our efforts deep past the work to and behalf expertise

Now, Operator? questions. let's turn it over to your

Siegenthaler of question Instructions] Your from first you. Craig line comes Thank from the of America. [Operator Bank

line Your open. is

the on Good you Matt appointment. morning, both Jenny, Matt. well. congrats Hope CEO And doing

Thank you.

So my pattern going? are Franklin, perspective do how flow between money seeing question to when institutional franchise private really the And channel. it is, Is rising large where to you income cash, it? you into I a or given retail behavior credit, able investors across you equities? going different are And leaving, Western Brandywine reacting then on it's see the fixed are to rates. And recapture is your get and wanted your and

short-duration good But in flows going. – do details, Adam, want bit loans mean, into kind go to like little of detail? – a we're strategies. going into it's corporate Adam a I'm I more mean, but shift so more into all to not it's you definitely get of let bank so where there's seeing a there I

Sure. Thanks, Jenny.

of fact type the that, professional channel hit we've the of these don't see strategies the how is channel. driven differently really That's similar pretty not First are the and all, that all seen part I think we've than behaving see that days. now. would the core was on seen I is worst. that much changes What that, wealth on different institutional side. it right the really duration institutional intermediate a by I We the say patterns retail going

example I the funds billion look US of or in flows for of core the and think, that, $XX industry so March, month like for income. active a an was you if mutual without fixed XX% take taxable at something as

that the market that So Jenny lot. really Where hard. a going? we see really, picking short hit duration got see, money of is As part up

credit, of propelling Jenny in that where we in growth quarter. Our importantly our the growth had to in said funds, was rate private some a as where some the over see And is markets earlier, our in worth business, businesses We billion short player. part and our XX%. alts $X floating private it to of duration sales also, strategies credit up going we're significant in

The funds fund offer to one sources the think largest especially income an ability where that from our to we following our to And yield $X flow is saw some of net channels to in other the have quarter-over-quarter. quarter of that assume have which income. in to alternative their. really of I one billion generators place over And money some seen fixed fixed income really of at our for wealth of is pivot Franklin we we we've increase pleased our and of top that is clients the our a we're

able outflows So strongest Craig in the about good retain general being feel we're had a worst industry. where the outflows segment portion even we the to the of though in

end similar could that. do might we know follow-up more? topic just and we've this sort or given a more and you think try front eight bond you're matter because it short I your be more, the would Thank comment from I had you there one model that's flows, forecast long on of the on for from end seeing to And perspective as here my of but a gets curve as what duration clients? just love the rate of worse topic, hike And only nine

Yeah.

themes think is we good really business I to of see one is the across are the the that diversification. the news pleased

curve. the of different specialist investment very hikes we various to our ask and rate you differentiated positioning in a So along like have if managers impact because about number going it's that ways different

So that continue. think what of in Fed to have sweet we're where spot takes, action that regardless that means the able going performance I products we'll is are the to the be

grow. of One to continue the --

fact things our of regardless we the before, really environment. with of that which is pleased more have to been the One the it's is ability ever we're diversified grow the we think macro than means sales

Adam, thank responses the you for here.

Thank you.

you. Thank

we Next Bill up, from Citi. Katz have

open, Your sir. line is

so Okay. Thank the you much questions. taking for

sort So moment. for outs a to to I see and of ins I coming as expenses maybe few seem be it. a

Just unpack as incremental bit the next outlook synergies of is impact we a quarter? that took quarters? should for you. with the look for without And about or you right does out wondering we TA, point any over if of could new start expense the charge what be the And expenses Thank several you thinking have and maybe the Lexington? about how impacts sort other into does little

next the and breakdown morning. if I'll it's at, Okay, good guidance best so some some breakdowns. where we're both Bill. annual Lexington, give also sort and on some we guidance inclusive Maybe quarterly for guidance just can I give reset you, Thank not of update of quarter

year expect range operating excluding Partners. fees, We expenses but in XXXX billion to to the of adjusted now be performance billion $X.XX Lexington $X.X full including

fees performance on But had Lexington assets $X.X our management XXXX adjusted due revenues so $X.XX fees expenses excluding guide excluding now, to that's said to may that expense and last including You forth. would for change and quarter recall, and under so be and billion operating performance Lexington. it's one market conditions executing important Partners, billion both I and

I items Given be closed hope I'll give as few mentioned, a we've quarter. will line third the for which Lexington, now useful I

million – be in be be million again and and Lexington $XXX to range G&A information sorry and to to million expect of that's of technology around We systems, $XX around inclusive occupancy inclusive Lexington. services $XXX the all and information be of technology to

Street the my as $X very sort had Benefit Clarion out you Jenny also of talk but follow-up. And of I you on to about adding outflows back of Thank billion side. coming good That's liquid helpful. and very maybe much. think I alternatives the sort you heard the some growth mentioned you

unpack you the cycle? wondering then see And think that bit where Franklin capital the raising they So are about And as if to you more could little footprint? how flagship leverage opportunity Lexington, maybe through sort you of you. in broadly do a more. Thank it their

some on some the our Yes. were the strategies in of outflows Look so alternative of side. macro

As look fee Lexington now they're and at had billion $XX raise revenue specifically I talking far to capital deal announced up or and when not you the as we fundraise. the mean $XX I and about they AUM – in But – we're if the generating billion. think

done their and comparable at about more but it specific versus look see particular we're rate And fund not excited sort on details this really we're so of raise. how giving they've can on any you And others. secondaries

thing a in of particular a the but everyone they select Jenny, be quite we're going examples that products retail might there's been might strong a the at or to a a we where their they country Templeton history don't really add segment of with country as distribution are in in or to Obviously, their We've I that where of fundraising the don't able think team well as the they on is one Franklin own. The to they market most already the markets. long where know be add number areas has working accomplished Lexington. in distribution presence. have have had

will we and in where which where like had investment about help filling it's we've specialist gaps need sales better. managers, even just the of and do they're get strong the already with they rest an think their model opt-in with our So we're and some we really them strong process help discussions

areas I think also is global AUM BCG area about mean sort I of And obviously of of I revenue. Alternatives Adam big actually AUM you XX% XXXX, and a said talk big great out but point. our the XX% focus. that's think I mean growth. of came of represent

we channel So opportunity, in all equal. again And largest the as know big all think created flows retail that that $XX in in just assets the – aren't we take you is four trillion flows the the top seen of and they is really the public and they've $XXX credit. more important billion companies is move all wirehouses. X% stated more of and going we've reduction democratization private know the alternatives as

these our taking with getting retail marrying It's on. distribution retail just not think we been so vast material on complicated. And capabilities And and but There's the Lexington just There's it's really of goes it alternatives, a there lot a that of it has platform. part successful in be lot fund opportunity. it's to the of a raise has tremendous channel. their that training

issue actually We about J channel is don't curve the to we're the actually equity. you for think equity because opportunities. the secondary way have the or great private wealth access a excited So private retail

very much. you Thank

your comes of Hawken from line question Brennan And next UBS. from Bill. you, the Thank

is Your open, line sir.

for watch Good morning. Matt questions. the the taking guide expense helpful a we we've that, expense What we cut -- seen to follow-up what would of I for just should the X/XX calibrate for year, hear. think updated Thank you about that full be and How the when far had does my or that you expectation really on include that? that? quarter-to-date, when as so markets

And to to of also effectiveness the we've XX% market base past I XX% highlighted to and equipped that we're along is Brandon. XX%, course, market volatile obviously, of approximately variable, moves, And terms that, our know piece adjusted to market that efficiencies think and gets we've in other the we of continue to-date. It think with performance. to market moves. if further expense in long-term includes so added review. make the how the of we -- But tougher, I is XX% But

line Great. -- lot it your may the positioning you make kind strength are about continuing That's guys marketplace? and that -- way discipline in holding important the we How you of helpful. that continuing hear are how your Thanks And expense in for whatnot. then, to and is make investments a to balancing some so competitors competitive business the maintaining that that. with investments and to

I think...

ahead Jenny. Oh, go

answer going Sorry, was to just Matt, … I

go Oh, ahead.

…more short-term. details always but terms you I would will say thinking of of the philosophically, long-term any kind see what's in the us versus for business right

reduce long-term. costs, we to us for but reduce going to can never we're the So at where the work expense hard strategically of costs positioning

blockchain wealth because bottom-line, of And hit for over the positioning for will investments others, off in So long and a run. in really be in It we're pay the going but take be to significant making the we they're technology important meaningfully. the space the will important time they us for some And even example. think business. to little us long-term

go So ahead Matt.

we thing we can earmarked to where to when we make time And at but candidly. the have one other firm. areas of moves we focus have I'd thing with when moves cost are doing only is on the even to in merger the It's market that been company. and the through we flexibility this volatility? from, significant the add significant of our the your we because company And and synergies is we operation we've that remember, part are when created the the some of expenses think most we keep for how at is, flexibility through holding the go Where terms reduce focused continues going we it where to where create Brent finding Yeah a how question level that? we very yeah make you managing company run I had to a certainly up are money so mergers time, for basically in also

get we flexibility where the we So from additional take that's as in.

for Thanks that color. all Excellent.

Thank you.

Thank you.

up Blostein Next have we Alex Sachs. Goldman from

is line Your sir. open

morning, Good Thanks. everybody. Great.

of and So least management players the dent trying to in number and around way. seen a aspirations of We've now. the outside had there making far just of and channel. both wealth have Jenny people old the time fold your alternatives all a some the on, part with a maybe most to, comments of Lexington traditional especially sizable your at kind tackle of a into coming build really the Lexington But so of kind

asset all, the the And and warehouses base of what us across you illiquid next on success? be So product to, look to like? couple you would look frame, of like. years wealth maybe that what is your channel, out the today there kind consider a help if would of you want the What

we think alternatives percentage channel. are don't publicly to our mentioned think trying I'm of so. the retail what in I

say, I what it would complicated. Here's is really

We think one in wealth strongest are capabilities -- of Templeton Franklin industry. I digging has in distribution the the

We of easy. so And that the the to difficult positioning should view level The that, that much was, able to this sell is -- requires the and reporting, material them detail of reporting the probably The be be more products, follow-up get and platforms. at it financial goes understanding training to in simplest the thing with actually our take into marketing should how the capabilities. on in the the of their be the to that's each their advisers, required thing alternatives able is, channel. out alternative oh products in bring is gate reality right

enables in a of right, bring types so, And to wealth our be of Case the that manager one of able that's things to streamlining investment alternatives. like the

is, well. able -- executing on have good we about really able deliver we all to difficulty walk kitchen best ingredients to today the be meal. be it's it's kind a things really you and it is, to The bringing make of together the those have really, into -- all news to of to and the You if

I And priorities tell firm right. priorities this are resources. top two putting to this so, of we the top is and probably a got in my is get you of lot to our one two

able the our as we're and is road took we within make the making It's rest able wealth to I that be the we so, years, fill were be they our with Blackstone to of us, material alternatives of And well sure from in to the really that scaling It training. to making market, each paved up sure a channel. is, dent think wealth what supporting a specialists teams alternatives the I as complicated. address able to the more we're the initially. that they than news The understood before but good complicated the bit understand for several have it

Got you. Appreciate it.

to like you add? Adam,

add billion channel general can are couple and things I out sales alternatives illiquid retail but the $X gross have over channel billion for to quarter us last in We the specifically in for over alternatives, Yes, that. of don't been in a break that $XX the few our a quarters.

And be, lot knit because where think together with firms. product And point Jenny there. distribution structuring as excellence good a momentum have, with It's requires training, strong all a need it product, relationships we together we area force our that's have, then product see we into is at that the the bringing which good we really partner which said, have attention we all in to So, bringing significant this But we think really offices, it pieces. which that have. our and superior we etcetera. home of people, education,

way my continue. Great. last obviously about of credit-sensitive and flow But may position against a the think Thanks longer-lasting months seeing of that funds headwinds with you words, Fully and maybe guys Western that a right has appreciate uncommon, of effect nature And that a of invest. that's the to I duration, we've more the clients? now? as given to the duration-related for longer other the back they're relative larger couple just on is they some ability of understood suffered is, could industry follow-up Western, the well second. face credit platforms. The investment times for so So well do for that. of much I the of relative bond or as of flows Western relative guess outflows in kind seen have dislocation recoup and not in some How underperformance dynamics their quite more for performance that a bit at Western the other in lot think the

would a couple say I of things.

is they have the Fed of and mean Western conviction market you the a feel increase. I one talk lot overestimating So they that to is

have looked the to before income we is teams benefit Franklin different are. Western of And Brandywine, Now we've that's Templeton independent. that really they even rising the why back come very to things fixed thing and are that, within way the Western's case, they with cycles That's mean one outperformed they of the back they're looked cases, not quickly. is, over who XXX% back have and bounce next the I rate benchmark. months positioning at that we to we at I gone good at and diverse and the you that that performance the six XXXX the communicating believe tell truly in And right? managers clients about their positioned have

positioning. their right are seen, So on are their relationships positioning. have or job remains communicating doing and great with to strong They great they a of or they're There's be they whether not. conviction It correct wrong? clients

I'll that. couple a to things Yes. of add

relationships Jenny all they have with of clients. said great First

of you industry and score of client how they If in a at client metrics, off terms in look are the take engagement they some chart the service. their literally

three-year, period But the performance. one-year tough against the didn't duration was their long-term off credit. hedge down soft of their in that's That's challenge. strong that on when XX% the That's run at look correlations XX% our very really manager, the And had client look sales pay as have their our you a about relationships. five-year. So are outperforming essentially confidence and that a short broke what confidence utmost performance they happened. outperforming assets talk performance a performance them. on and That manager are the is still has the in not force in

Excellent.

Alex operating a while flows growth low, addressing different areas income it's impact a we've perspective, just Western income referencing, a not it's the growth parts it's the impact I'm referencing of but from are question, positive And really financial that noting from other fixed just compared worth the on -- topic, slightly the the referencing I it's I'm the relatively broader getting income we're operating think you're -- and alternatives to we're referenced. of different in

for sure Thanks so Thank you. much. through Yes, it’s coming Great. [indiscernible]

Next Ken we have JPMorgan. Worthington from

is open Your line

up your response Thank question I Hi. wanted and to Katz. to you. follow Bill Alex's on

So And the not alternative integrate So you about you And you how like, like the thinking level, are in talk integrate higher where can maybe you going platforms? have from to are about integration going a of now -- mix are them? start with you to so various Lexington the where them? out distribution.

your of in How kept other In can Are of other product want to are being those And products do of in Franklin? being of on product terms development. out? new And relationships development, channels products alternative be cross-trained the expertise good broader aggressive integrating is then have like distribution And of where you separate? distribution, quickly, maybe really the my question are different part you focus? you combining how you then together? get for into but kind terms sales sales forces they how you kind folding their

I don't you. it Adam then why and over start turn to So, I'll

news. Each managers most good the of in -- Here's their was those had cases, own really it institutional.

And institutional the mess leveraging on we've Franklin relationships, alone institutional there side, success. of a broader be left why But to they with have Templeton. the retail and sales so those so teams, has

talk be what call IPMs, team products. the you institutional and managers And managers, about reside capability, specialists and our investment by investment distribution portfolio the really have can goes we in in so with called institutional team the you are specialized where who investment XX come And this who for -- product to team. the have they specific sit with

So, an they're it. extension of really

we of support to help can the on And call so distribution those capabilities. any

line there's in is But a always and divided bit say there. little by could channel. of broadly gray wealth that So, you institutional

managers. And And there. of into that that and in have, an centralized it's to bring so relationships that team for collaboration good make don't imperative institutional if there institutional us are on there's our sure any investment our make one will introduction specialized an has they

So, to great to momentum. our continue the goal have is

fact As that, obviously, private tremendous team. see in the I Lexington, that equity ideal wealth that as the you can have billion from to $XX with mentioned, a they increased billion distribution -- that $XX they've pre-close secondary is also we channel. feel strongly But

As that product the plans channel going which is to have able one we a far managed that alternatives has the wealth ways like of think account access as an things be you in the XXX(k) alternatives. where to to capability, allocation is

a about that have we expect team help really Adam anything where that? of solution. to you going in want great and to products. they build do capabilities to centralized And is can present a our teams to those we the to pull product type together combined add so work in And solution-oriented thinking

Sure.

anyone I anything that one said, These is at distinct. but absolutely the teams Jenny place on knowing in right various where the bringing it model a investment that folks terms thing would right? our the are really the right put responsible distribution in general else is the we're the hopefully I managers. are specialist general at clients better in the sit who their specialists is not goes integrate the being going investment then process, investment from one than think is where top specialized and to without for Jenny or model the center

markets. alternative in introduce relevant outside, the actually specialists we're institutional institutionally, the alternative the the various to salespeople adding SIMs On gatekeepers to

US presence. see alternative outside need as some firm the our use each it. significant an opt-in have and don't in salespeople help firms model the where Again, they of uptake also a the of We an we it's really of as of

at On distribution tackling consideration. own is of retain alternative And our I an going the will SIMs branding branding, point but are alternatives. we're under be how to this that their that each FT is think wealth platforms, important effort the

So, into ESG going the is The there's is channel. then and you really That contact to some area channel, raise that of a which products, think us products the brands as product we've of terms products we're on really multi-affiliate results. enables in well, We're interesting And well significant alternative products. individual single remain. focused point both evergreen also we is onetime things will ours the well. focused on in as as in know yield another of wealth do of focused on something ESG that but development inclusion

AUM. Lexington total the Great. the for big AUM and close just to rate gap question. a report the a or...? it? to There's of fee-paying Okay. get the you And AUM going paying, are Are fee or sort just you reporting pretty How gap simple and you to between reporting fee report we'll going are

fee going we yes, all Yes. the the to probably be mean, low about We're to the very if is we're AUM, I consistent of rates. report something things to so other effective just AUM. take fee be full with rate mean, the we're going just XXs. how report you I transparent like

to AUM, be include performance going fee-based you to fees. in just the low it's the If plus mid-XXs XXs,

that's we way it. So the will do

Okay. Thank you.

Thank you.

Thank you.

from we up, KBW. have Robert Lee Next

Your open. is line

Great. taking Thanks Really my for Good morning. questions. two.

we bit a initiatives I little channel? acquisitions. on First, your very on you maybe business? you've place then about talked it's some I'll of inflows. up follow-up $XX wealth -- can deeper that more know to billion wanted you us continuing the a do the to some had kind in a just, But to on update have there in And it a of fintech. dig growth drive Can sticky management maybe

Yes.

like So, it's -- that business. we really

-- grow to us we strategic it's that priority said have for it. a We

had you As quarters of it six those of It's positive net flows. businesses. mentioned, consecutive one

so it. like XX%. average those pleased like is of great something really done the the specific at AUM It's the like two had up a years. entities we relationship and XX think We business, acquisitions we're I is sticky because

So, always either or capability sort of that actually some area opportunities. looking. you've and It additive, buying up to an opportunities geographically be we're private for Those bring we're more is to have continuing consolidating. will be and look seen

chase who's capability we broader So, want usually home which -- -- to the somebody businesses years to We what offer for the means errors long-term and having assets. probably to a things. their close fiduciary to looking by it's can it's And add they they And education don't like those to wealth, around trust. [indiscernible] one is multigenerational on to now. XX really understand this of clients

client. the who it's of have right home so, that And type people for

that I of an know about then technology you think just history press or you beneath follow-up, -- or several specific Great. if yours been, there's years? distribution maybe you point example investments, excited in talk front, to performance the release besides potential the could for maybe have mentioned it. interest you're over accelerate on And out maybe a about to call the surface don't know as and innovation differentiate feel Okay. it's help like and helped I is been early But next or transaction and they're for financial but years maybe embracing I growth of can many the examples Embark the maybe you particularly you that

Yeah.

as a users talk and adviser AdvisorEngine, build the a acquired has small CRM about which to acquisition like juncture, -- something actually we system, wealth but is their The which to -- I'll helps there's speak. the business. conference it's a RIAs speak on CRM we for which fintech So at them great system. XX,XXX It's think way it's I

So it channel. another optimization developed to was is just in-house gives to gold that our talk which Go, us engine. way

As They gets through deliver models. platforms. a helps our integrated, with sell models open choose clients could gets to and It models proprietary platform, integrated our planning other choose it's financial and can it our architecture. us those that cloud-based

of like the is also So when adviser investment is more a expect why the of any significant. efficiency, they values to it Canvas do these of client piece as lot the course but -- -- things became the tax it a fee-based, adviser which so

estate now including channel So deliver the planning fee-based the it net tax financial and worth planning. ultra-high what efficiency, to to is used expected adviser -- deliver trust education clients to really just even planning,

helps we can anything think business adviser So create build and we loyalty do how their is fintech that that ecosystem. that that of

communicate obviously So has share allows their platform think advisers in mentioned about It's I capabilities. $XXX as our and assets, it to the us billion and discretion. AdvisorEngine I to just that juncture

relationships. build helps us just it deeper so And

to business group really Instead would add firm. who organization, you're people it an also that Jenny, of I talking of to now investment helps management us CIO just in at want people wider are you the you're how group about the talking to in to talking run which better when they product. end them trying position how actually business, about to to help grow and investment and business their helps talk an sell talking advisory you're to their you're a the

so much added Great. color. it. you for Thank Appreciate the

you. Thank

have we Cyprys up Michael Morgan Stanley. from Next

Your sir. line is open,

Good afternoon. taking the Thanks question. for

there. could front, the hoping you more the I on on some bit Just elaborate SMA a of initiatives maybe was

Franklin think you of could income that such additional you in offering other I the the offering that SMA? thinking and you're mentioned wrapper? bit strategy little strategies of strategy now you SMA. a you're offering in that And SMA how talk like navigated how some a Maybe about, the complexity about challenges in

their largely complexities we The from and strong to, had onboarding where the standpoint. technological that's strategies operational Franklin the a growth. accelerating and provider really which technology SMAs, Legg Mason platform are come one model-based of Yeah. a number real industry, lead on is operational And on legacy now that

where like Martin onto recently and platform. Franklin we've Canvas of really a but take in what strong Western the been on Currie, SMAs, side it's we've that outflows because like been legacy look Income we've ClearBridge, inflows newer platform onboarded you onto if SIMs the seen groups So with some the Fixed Templeton, we've flattish

off other of partners our could is this where to So really outside go that SMA well interest as again, diversification SMAs see we we the well. the of there have some space. We grow in way States paying in think distribution United the that some adoption

a Great. And follow-up for question Matt. just

regulatory maybe With flesh much of think truly maybe the on be balance the product number I there? excess and $X gap help you you're sheet, think billion the after you development. had excess should is how just today? help and truly could that called that with right sitting about, that's bridge thinking out Is the cash or capital investments which out remaining we you here can around you $X billion

that. Yeah. lower I define being would a excess as mean I than we pure lot think

be in for to there for need you You $X this do things is us. market in But know able larger less particular, way we capability structured talking how way think say, I conservative example, transactions upfront to so put is that a M&A, in you're be create excess these if can with larger so opportunity means mentioned as we beforehand, of much one something cash, I've to are out if that let's a that billion. a structured amount that about is the in are stretched there sensible it Mike, around

billion from referenced? the billion on $X And that bridging $X it. any down help the Got to you

hundred in little million a Well, bit there's dollars. capital we regulatory few a have of -- there

a months I like we -- cash think on where the internally the that chart. on we operating several of form put it provision of our we a supplemental expenses to have call Then liquidity in balance we have sheet.

second thing. the that's So

bridges we the spent And billion surplus just $X gap about. The that was third billion as consideration we but in that the We the that investments cash the commentary and on in talked make sure we cash for to then, Lexington. $X that upfront $X really, at put the X/XX got of spent clear this billion. thing yes. is you just And are the just footnote

Great, much. thanks so

Thank you.

Thank you.

Jeffries. Next we from have Dan Fannon

open. line Your is

obviously appetite given topic to your M&A, Thanks. guess follow-up you wanted I some you've deal, for on large been I that a here closed and and acquisitive for just time. on, just

So properties. there with as been also recently you news in -- think other is property certain of obviously linked larger the you've about this backdrop, some more

your offering? round in are areas And could in your of So more can kind other also you where you talk of looking those term, about traditional for product out think but the in kind longer larger you gaps, M&A mostly also are that appetite I short-term? product alts,

gets -- long-term. So, the say, big obviously any just haven't always deal and listen, raised, bar the done is but we're -- I we've a are changed the would time for so the business we there choppy, markets running

some that's Asia, for – isn't so to always breadth Infrastructure broadly if said estate traditional the us. And real that's problem it's alternative for feel geographic. ETF product have high really be that respect very wealth is But that thing bar Street With left safe We've I important there an more there Clarinet, interesting example, hole actually we a and so about could So in also was there manager if the if space, probably not or If I made think, may now. from but I'm for area local good would lot hard the would the we were for about be have. is the of manager US-focused, is Benefits traditional. sell product would to that gaps, management capabilities first. an say, one more then, trying to capabilities. of only it's say us in a us sense sort that

far growth opportunity for like with the and capabilities have if right there that sense that organic but the maybe we was have, the make on really gone so us. We would

So till then, of obviously management. course wealth

ago, zero alternative And specialists in area, just worthwhile talked couple we've in some our so I much making mean, have from XX% where the the zero now Yeah. is we about of it's pretty three and asset I point think we years alt. that high do gaps there's level, of about those. at AUM a a or

that of or to percentage in we revenue income. increase our overall earlier come eventually assets. mentioned alts something in more XX-or-so-percent that probably private intend form from some operating defined. objective from And I Jenny alternative to translates that XX% of going is like other revenues and markets continue into to half probably to plus broadly like are So And contribution think to

then flows it. and backlog. And the a on institutional just follow-up Got

well could talk give Mason like if it, of Western that stark was if you if talk core think of kind And because are and AUM, numbers performance. those in is and numbers of makeup that the to do pretty makeup I off, terms most core what I about, the be us and institutional. the remember First would of the of correctly, plus of on want it could lot maybe about follow-up disclosed as the you historically? a I When Western of

some in So and around in trends. as firm that a potential near-term for context of kind at more then the dynamics potential kind terms the think the conversations some institutional kind flow redemptions of book looking maybe risk of of clients backlog as of context and with and about the the for whole the institutional of Western the AUM you of

Sure.

core But have all, and asset of and top funds for still gatherers very, had in among our sales. challenges plus? First significant we core they're very gross Absolutely.

that clients still in the hasn't of So real a we see pipeline, we don't Western believe the But at you there's SIM, and I pipeline. there. that And break if XX% that, that, product accounts take look net of don't really a have down I strong, where a in SIM any chunk by one still funding we of more think commitment there. shows but been while it for significant than funding

business, diversify front. institutional again, well we're we seeing as our on to diversification on wealth the continue as So front, the as

well, again, other a those And The you they of now way point year, where in down other as Western it thing is get the don't And areas. right money, without seen risk of term. have outperforming understands three off. funds. some And the you that their and some shorter pay other a Western of lot and about we've some Western sales active will to is, taking have I manage slowed more the And core risk assets over your areas over market hasn't core plus. than in manages a XX% think paid in But that off than more the pickup the time.

this had before, they've time a they've come every Jenny said, back. roaring As like dip

Thank Okay. you.

from Thank follow-up And a question from we Bill you. Katz Citi. have

is open. line Your

sort Thank efficiency here. opportunity savings substantial my coming expand question pretty question. much Matt, Lexington? just from much more come so revenues little Can more into I'm to sorry two-part. maybe mentioned top of your management numbers the is? you. the priority How back your retail you incremental and the expense what a down. is Thanks Maybe Jenny, legacy of the are key business and Can And or one synergized in you bit you belabor with two maybe versus is taking getting on appreciate of priorities. the that Okay. wealth then for ultra the unpack so improvement I

Yes.

have the the right say future. is I we mean, capabilities for I making that priorities would one sure to So our product

keep channels on able to appropriate. sure we're two, opportunities; in our all open where that's that them so we why distribute eye M&A the And making is

And so for accounted all that XX% bringing growth. that alternatives I flows -- area and important revenues are is of we equal of AUM really as of said recognize XX% a not

got right. looking about to what not now now focused I we're out think right on to to but we've done And done figure be how around just we're has we that the think focused So making on a from then corners. sure get disruption, that that

our keep so investments blockchain And very why think disruptive. eye we that's be on could FinTech we things

in of strategic -- think that can. of the possible. we were be. it's largest global this be back completely. us could lot we kind than and go So as had providers pushing We that service sure made business that more business any efficient you're those cover our this the and constantly way efficient decision provider There's to to we one the service as operating have manager to and outsource are so a could that office as recognition make was effectively there become a Initially, the honestly wasn't initiatives yourself high-level only we about. then you about fees as inefficiently the And

as the is well the always capability to we make with so continue opportunities. and ways efficiencies are have the new reinvent Now in our to way all there those operate invest sure pressure to company as to we that fee to deal

I that question synergies It's transaction. it the terms cost -- expense workday might the of be There frankly move modest doesn't with question us across it a we've acquired. of that -- may there by in firm around -- that but and it synergies these doesn't all there And and -- all the Lexington needle. SIMs for are as the way the savings but that mean associated about there Bill, -- implementing across financial the alternative that things amount like is be zero or cost tiny expenses really revenue zero is we firms asset

dynamics. transactions the to market referred response legacy in there from I've Lexington expense or the to So are from zero reductions of the

type – well one companies believe priority here want the if and I to with environment. because and may We But we is we it. of own you of it. to long-term impact community the that's change have finance at the Look how and -- so a just sustainable think the XX% on about top and reality conflict coming to at missed more wrong stay. to from Europe think is It's the as I our I their look products of where voice Actually, current here the about prices we add in bear the stay X and as the they world the made recognized ESG, sense really genuinely people that ESG priorities X pipeline really a oil of table. see that we Article is we And think probably can term. of hire

to is products we're alternative that we of development. really that in sure sure on us. top sustainable making type important product including So making Adam finance as the And space, mentioned, have

Thank you, again.

Bill. Thanks,

you. today's Franklin's concludes for to hand now This to back over President session. Thank Q&A the Johnson, I like comments. Jenny CEO, would and call final

and focused quarter this time. to this all again, would on clients. once, forward each to their next remaining employees And thank look outreach I you, other. for Well, you to has really to for And call work speaking our our clients quarter. hard we been and just operator. and particularly thank This really a again of like in Thank participating you massive

joining. call. today's you This Thank conference Thank for concludes you, all presenters.

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