Franklin Templeton CEO Jenny Johnson on making family business last

Franklin Templeton CEO Jenny Johnson has two equally demanding jobs. He runs a fund company with nearly $2 trillion in assets under management in an industry experiencing rapid change, from active ETFs to tokenization. And as a third-generation leader in the Johnson family, he is responsible for the legacy of a business started by his grandfather 79 years ago and now worth nearly $13 billion on the stock market.

It is remarkable that a family business like Franklin Templeton’s survives into the third generation. To make this point, Johnson often references a saying that appears in different forms around the world. In the US people say “shirt sleeves to shirt sleeves in three generations”. In Europe “from gridlock to gridlock.” In Asia, it is called “from rice fields to rice fields”. There is also “Rich father, noble son, poor grandson”.

Or to put it another way: the first generation starts the business, the second grows it, and the third generation may lead to failure. The actual data supporting this global narrative is disputed. A. 2021 Harvard Business Review analysis During the climax of HBO’s “Succession” family business drama, it was revealed that the widely cited statistics for the “third-generation failure” thesis were based on a single study from the 1980s, and their data was open to misinterpretation. However, a family business has a unique set of risks that must be addressed uniquely, and many families are not properly prepared. Only 34% of family businesses have a documented succession plan, according to PwC’s 2023 U.S. Family Business Success survey.

Johnson says one of the challenges he sees is that each generation experiences the company differently. Founders start with very little and try to create something valuable. Their children see their hard work and want to help the company grow. In the third generation, the environment is different because the business is already well-established and younger generations may have developed different interests. And these interests are not always compatible with hard work.

“The third generation has a really comfortable life, and it’s hard to be motivated to work that hard because there’s all these other things you can do and they’re not going to change your standard of living. That’s my speculation,” he told CNBC’s Julia Boorstin on the latest episode of the “CNBC Changemakers and Power Players” podcast.

Johnson was named to the 2026 CNBC Changemakers List.

His perspective was shaped by his father, second-generation Franklin Templeton CEO Charles Johnson, who turned a hedge fund manager into a global investment firm and became a billionaire. But for Jenny, the leadership and succession roadmap became clear within a few years, and the unique risks of the family business were always top of mind. The family even hired an estate planning expert to celebrate his father’s 80th birthday, and among the things the expert told the family was, “I’m tired of doing all this estate planning and completely destroying heirs.”

From Johnson’s research and lived experiences, he isolated several factors critical to sustaining success across generations. First, the family must have a set of values ​​that are constantly instilled. Secondly, the business must always take care of its customers. Third, the family needs to decide on the best talent within the family to be the guardian of any asset, without a leadership role being given to any one member.

Johnson says his father instilled the values ​​and customer-first mantra, and he acknowledges that successful family businesses thrive early on with a shared, reinforced culture. “If you are part of this family, you live by these values, you work hard [and] Work with integrity,” Johnson said.

But growing up the sixth of seven children, he never thought he would run the family business. “I never really saw myself as a CEO. … I didn’t think much about it,” he said.

Ultimately, this is where choosing the right family member for the right job comes into play.

“At some point we all went and worked in the business because you needed a job. It was convenient. When we all graduated from college, the business was growing so fast. It was in the ’80s. It was the heyday. People woke up to investment funds at that point and you had tremendous growth. … Those who were passionate stayed in the business for a really long time.”

He worked in many roles across the company before being named CEO in 2020, focusing mostly on technology and operations, “and I loved it,” he said. And he says it’s crucial to have the technology background that a marketplace CEO now has to have in the world of AI and tokenization. It was also an approach to learning the business that came directly from his father:

“When he took over the company, he only had one part-time employee, and then he was himself. He did it all. He was fund accountant, tech, customer service, chief investment officer, salesman. At 93, we’ll circle a footnote of something and send me a note and ask me a question about it. He understands at that level.”

His brother Greg, who focused on the investment and distribution side of the business, was CEO before him. Greg currently manages MLB’s San Francisco Giants; Their father, Charles, was the team’s largest shareholder before handing control over to his son. “I think there are a lot of people who think it’s more fun to coach a sports team. I personally prefer what I do,” he said.

He was once on the Giants’ board of directors, but says now: “He runs this entity much better than I do. He’s the right family member for this.”

“As a family, you have to put your own ego aside and say, ‘Who’s better for the family?'” Johnson said. “It’s being willing to ask,” he said. “Actually, you have to decide who has the best talent in the family to be the guardian of this being.”

“At that point, it made sense for me to come in and be CEO, even though it wasn’t a fait accompli,” he said.

The board subjected him to an external review to compare him with other potential CEO candidates.

Ultimately, “it was more about what I could do to help build this business, this family legacy. You definitely feel a part of it,” he said.

Johnson took over during the pandemic and didn’t wait long to make his mark; Franklin Templeton acquired Legg Mason, a major acquisition that doubled the company’s size. Despite the timing, Johnson describes the pandemic as a reminder of how important consistent leadership is. “Just get on with it,” he said. “Something else will happen. We’ll handle it.”

Follow and listen to this and every episode of the “CNBC Changemakers and Power Players” podcast Apple And Spotify.