Franklin Reshuffles Executive and Investment Leadership

Leadership changes at Franklin Resources have the potential to significantly shape the firm's investment culture over the long haul. Effective Oct. 1, 2015, Franklin veterans Jennifer Johnson and Vijay Advani will become co-presidents in charge of jointly overseeing investment management and related support services, such as trading and risk management. Edward Perks will also assume the newly created role of CIO of Equities and report to Johnson and Advani. Current president Gregory Johnson, Jennifer's brother, will continue as chairman of the board and CEO and aim to devote more time to clients. Franklin Templeton U.S. open-end mutual funds (not counting money markets and funds of funds) have seen $10.5 billion in outflows for the trailing year ended July 2015. During the past five full calendar years, flows have been positive, but diminishing. They've come back from worse.

Although Jennifer Johnson and Advani are inheriting Gregory Johnson's president title, the responsibilities they'll assume come from executive vice president John Lusk. He has been in charge of investment management since 2010, but announced in early August that he will be retiring in March 2016. The overlap between Lusk's last day and the co-presidency of Johnson and Advani provides time for the transition to take place. The change bears monitoring in other respects, however. Neither Johnson nor Advani will be leaving their respective current posts of COO and head of global advisory services. Instead, they'll simply have more to do, even if the ability to share the added workload will help. It's also a bit unusual that Jennifer Johnson and Advani come from the firm's business and operations side but will oversee the investment management division.

Jennifer Johnson and Advani will be able to draw on the expertise of Perks, who has been CIO of the San Mateo, California-based Franklin Equity Group and a portfolio manager since the mid-1990s. As CIO of Equities, he will be in charge of his old group plus the Franklin U.S. Value team, the Templeton Global Equity Group, the Templeton Emerging Markets Group, and Franklin Mutual Series. Michael McCarthy will take Perks' former role as CIO of the Franklin Equity Group, and McCarthy and the CIOs of each of the other groups will report to Perks, who will continue as lead manager of the nearly $90 billion

It's worth keeping an eye on Perks in his new role, too. Like Jennifer Johnson and Advani, he will shoulder a lot of responsibility. Plus, he will face the challenge of facilitating further cooperation between Franklin's equity teams in such a way as to leverage their considerable expertise while not encroaching on the relative autonomy that has been central to their past success. Time will tell whether he'll be able to strike the right balance.