We're a global company. eToro is a global company. And so being able to deliver products in all jurisdictions for clients is really important for us. And so we just completely aligned with how we're thinking about things. And then Franklin's been a real leader in digital assets and we think that blockchain is going to be critical to the future. And so that piece of innovation really aligned as well.
Hello everyone and welcome to another episode of Conversations with Leaders. And today I'm joined by two industry giants, Yanni Assia, the CEO of eToro, and Jenny Johnson, the CEO of Franklin Templeton. We're diving into their new partnership and how it's reshaping investing for a new generation. Let's get started. Jenny, first of all, how are you?
I'm doing well, thank you. It's great to be here. Thanks for having me.
Well, it's great to have you as well. And Yanni yourself, how are you?
I'm very good. Very good. Very excited about our new path as a public company.
Well, absolutely. Big things coming. And obviously, Yanni, you know Jenny already. Can you just explain that story?
Sure. So, I'm obviously a big fan of capital markets. And as a fan of capital markets, always admired the trillion dollar asset managers. Jenny is one of the top 20 asset managers across the globe, one out of four women that manage the 20 trillion dollar asset managers across the globe. And I had the great opportunity to meet her at the Milken event a couple of years ago and I was inspired by how much she speaks and talks about innovation and blockchain, and that's before this year with where crypto is going. And I asked and Mike made the introduction, and very excited now about the new partnership with Franklin Templeton enabling our investors at eToro to enjoy the very smart asset management talent at Franklin.
Absolutely. And Jenny, for some people, they might not know the whole story behind Franklin Templeton. Can you share a little bit about the company's history and why it's now such a big name in the finance world?
Sure. So, it was actually started by my grandfather back in 1947. And my father is really the one who grew it. My grandfather also had a brokerage business and so his older brother ran the brokerage business and he wanted to do his own thing and he said, 'Hey, you have this little subsidiary. Let me run that.' And at the time it was $2.5 million in assets and $10,000 in revenue. So obviously grown a lot now to 1.6 trillion. And today, you know, we were Franklin Funds then. We acquired Templeton in 1992. And that really they were the first sort of pioneers around global investing and particularly in emerging markets too. Nobody was thinking about that. And that made us a true global company and today we have offices in over 30 countries. We have clients in something like 160 countries. We manage assets from traditional equities and fixed income but also alternatives: secondary private equity, venture, real estate, private credit, hedge funds. So we've got really one of the broadest capabilities of any asset manager in the industry and that global footprint. We have investment feet on the ground in 87% of the world's GDP because our view is if you want to get insights, you have to be a person who's in a local market reading the local paper, speaking the local language. And so that's always been the philosophy at Franklin Templeton to really gain insights because what's your job as an investment manager? It's to find those opportunities. And you have to be local to do that as well as from a client service standpoint. People want to feel like you're a local company. And so I think that's a pretty unique trait of Franklin Templeton.
Yeah, very good point and an incredible backstory behind the company too. One not too dissimilar to Yanni and eToro. Yanni, just on the partnership and the eToro and Franklin Templeton strategy designed to evolve over time and include elements of both growth and protection, especially for long-term investors. Can you walk through the thinking behind all of that and particularly why it's well suited for younger or first-time investors?
Sure. So I think the portfolios that were devised by both our investment team and the Franklin investment team, we were thinking of how do we help our customers basically choose an investment for a longer period of time. A lot of our customers are starting to trade with eToro starting with stocks and now they can have the investment management expertise of Franklin within our smart portfolios to invest in portfolios towards 2030. So a longer time horizon than most of the average investments in eToro which tilts between fixed income and equity towards more of a fixed income over time. So very excited about this new opportunity. And we're actually launching it also as a capital guarantee. So we understand these strategies over time generate returns and it's a great opportunity because a lot of our customers sometimes fear loss making or the volatility of the markets. And this is a great example of a product that we believe so wholeheartedly over time grows that we can actually give it as a capital guarantee smart portfolio to our customers.
Amazing. Jenny, I've got one question for you coming up. I almost want to ask what dogs you have. So you can answer that as well. Now, I don't know if Yanni was in at Milken when Mike asked me to participate in a happiness panel as Mike does, right? And of course, I'm on stage with three people that are experts who have studied this and I'm thinking, what do I know? And I thought I have to have a stick. So I had my bulldog Tinkerbell with me. And so I bought Ticker Mall and I said, 'Listen, they can tell you a bunch of stuff, but I'll tell you when you show up at home, your partner or spouse may or may not be happy to see you. Your children may or may not be happy to see you, but your dog is always going to be happy to see you. So if you want happiness, get a dog.' So Tinkerbell actually has gotten kind of, you know, people have gotten to know her pretty well and now I've just added and it's completely disrupted Tinkerbell's life a Bernedoodle puppy. So Tinkerbell's not that happy about it. And so there's a little chaos going on in the background here. So I apologize.
Troll the puppy.
No, she's now eToro famous, which is great.
Speaking of eToro, Jenny, why did Franklin Templeton choose eToro, which is a social investing platform, as the partner to bring this strategy to the next gen?
Yeah. So, a couple reasons. I mean, one, I met Yanni and I his passion around what he's doing and what eToro is doing and the growth. To me, you want to align with people who love what they do because those are the ones going to be successful at it because they're going to do the hard work that's required. And to have that vision around really bringing a social investing platform to engage younger people to get them investing. I personally one of my biggest passions is of all the investment decisions you could make, just investing is the most important one. And I'm just going to give an example. If I save $5,000 a year, and it could be $500 a year, but $5,000 a year from age 20 to 30. So just for 10 years I will have more money than a person who starts at age 30 and saves for 30 years until they're 60 years old by the time I get to 60 because of the power of compounding. And so you know what Yanni's doing and what eToro is doing is they are engaging people to say get in early however it is and we want to engage you. And let's face it, to do good oftentimes requires capital to do it. And so creating that social investing platform where you can be talking to your peers, but also you can deploy your capital in a way that is personally passionate for you, I think is really important. And so number one, loved the mission. Two, love the passion around it. Three, we're a global company. eToro is a global company. And so being able to deliver products in all jurisdictions for clients is really important for us. And so we just completely aligned with how we're thinking about things. And then Franklin's been a real leader in digital assets and we think that blockchain is going to be critical to the future. And so that piece of innovation really aligned as well.
Yeah. Couldn't agree more.
Couldn't agree more. You've also taken models that were built for big pensions and made them available for everyday users. What changes were needed to make those work for the Gen Z or on a mobile platform like eToro?
Yeah. You know, like when my grandfather got into this business, the reason mutual funds were created was because the average investor didn't have the ability to access the equity markets. They couldn't get a diversified portfolio. They could maybe buy they didn't have fractional shares. There were a lot of limits. And so somebody came up with the idea, let's create these pooled investment vehicles so we can truly democratize access. To me, the beauty today is that technology exists to actually create portfolios for an individual that are the same types of portfolios that just institutional investors with billions and billions of dollars have access to. And so what we set out to do is really to provide the building blocks and then have them customize. That's where our teams work together depending on an individual's needs, right? And so, to me, that is really what we set out to do is to say, let's ensure that every investor has the opportunity to access a portfolio that historically has only been to the world's largest investors and really democratizing investing.
Yeah, that change is massive and so important and I think such a good point. And Yanni, coming to you, during eToro's IPO, long-term investing and diversification were big themes. How does this new product sort of bring that promise to life now?
So I think we have just also rolled out the recurring investments or saving plans which means our customers can actually do recurring deposit from their bank into an investment vehicle. And I think that this type of partnership, investing actually with a long-term horizon, maybe create those investment plans either to yourself or even to your kids on the eToro platform, I think represents a different mindset from where our customers started with eToro from actually just buying stocks and buying crypto. And I think it's a great opportunity for us to help them plan for the future as our customers are now average age is about 35 and growing, to make sure that they continue and accumulate wealth and grow that wealth with us across trading, investing, and savings and wealth management. And I'm sure it'll be exciting to see our ads for recurring investments into Franklin Templeton smart portfolio in eToro in German and French, and in Australia, Singapore, Abu Dhabi, and the UK. So again, the global aspect of selling expertise of a trillion dollar asset manager on eToro for long-term growth of assets is a core part of what we want to develop eToro into.
Fantastic. Jenny, Franklin Templeton I think it's fair to say sees trends before most. What shifts are you noticing in how people invest at the moment, especially when we talk about AI, crypto, and digital assets and tools?
Sure. You know, there's one thing I say that with all the changes and trends that have happened, one thing hasn't changed since Franklin Templeton started in 1947, and that is that people have individual goals that are very personal to them. So, you know, whatever it is, I want to save money for college, I want to save for retirement, I want to be able to buy a first home. Those things haven't changed. What has changed is the tools that we have to actually be able to customize portfolios that are much more designed to deliver the outcomes that people are looking for. And so, I think that's what gets me really excited is that kind of personalization component that's coming. And then what's happened is you now have the ability to have much broader portfolio exposure to other types of things. So one of the things that happened in the financial crisis is people realized that fixed income and equity were supposed to be uncorrelated, meaning if one went down the other one was protected. And then suddenly people realized that they had credit risk that they thought was just in their fixed income portfolio that's in their equity portfolio. So they both ended up dropping and that was a shock to a lot of people. And so now what's happening is you can provide again this is about access to often uncorrelated assets that institutions always had but now individuals can have access. But whether it's gold, whether it's Bitcoin, whether it's crypto assets, these cultural type assets where you're going to be able to invest in a portfolio of art and own a piece of it and they will be uncorrelated to a lot of the traditional investment types. So it's this ability to customize a portfolio much more to your individual goals. And there's more ingredients that can go into that because you have more access. So I think that's really interesting. I think there's a lot of people who want the self-directed component, right? They want to be able to pull the trigger, but they want a little help on saying, 'Help me shape where I should think about this.' So I think that's a big trend where it isn't just let me go out and buy individual stocks. Let me have you help me think about what that portfolio is. And then I think what we haven't really seen but it's going to be big is AI is going to play a big component. You're going to be able to use natural language processing to say, 'Create three portfolios for me: one around retirement, one around I want to save for in two years I want to do a trip of a lifetime. So I need this amount of money, so build a portfolio that has a two-year duration on it, and then I'd like to save for a down payment on the house.' Help me construct those portfolios. AI interface is going to help you talk about what your needs are and then also build those kinds of portfolios. So I think that's very early stages but I think that comes.
It's actually now less early stages because we actually just launched today our AI assistant, which enables you to do almost everything you just described. So Tori is launching today, which on the back end connects to all of the data sources we have in eToro, and we enabled our professional network of investors, the 3,500 popular investors on eToro, to actually build strategies. So actually connect with AI and use vibe coding tools to actually create strategies that define, 'Hey, this is the strategy. I want an AI agent 24/7 looking at this strategy.' And then eventually connect these strategies that are built or purpose-built by our pro investors and connect that to the Tori assistant, which can help the mass market find the right products for themselves.
See, Yanni, you didn't even prep me on that. I had no idea that was coming along. You and I are on the same page.
Yeah, look at that dream team, dream partnership. This is what we want to see. And Yanni, actually, if I may, she mentioned the Tori assistant there as well, but you've got the tokenized assets, the 24/5 trading. So eToro has been on a bit of a roll at the moment. What sort of sparked that wave of innovation and what's most exciting about all of that for you?
I think the biggest thing happening is we're just able to accelerate our product velocity with AI. What we've been seeing in eToro out of the 1500 employees is that using AI we can just run much faster and deliver higher product velocity to our customers. And I'm a computer geek myself. So now suddenly I can actually vibe code things. So I'm requiring our team to open APIs for myself and for the team. So it's really mind-blowing how AI can transform so much faster development. And the other part which again I see very much eye to eye with Jenny: I think AI today in the hands of retail investors democratizes much more of just self-directed investing. Suddenly our customers have the tools that two years ago were accessible only to the best and largest quantitative hedge funds in the US, being able to create long-short strategies, all the way to the fact that AI is getting better and better. It also both understanding our customers as well as making very smart investment advice or investment decisions. So it's quite amazing to see just the last six months how much smarter AI has become both as a developer and also as potentially the future advisor or financial planner for our customers.
Yeah, it's incredible what it can do now. And like you said, it's only going to get better with more experience, isn't it? It's crazy. Jenny, just circling back to crypto, obviously you've done some pretty bold moves with the tokenized funds, the blockchain integration on all of that, but what's your view on crypto? I imagine it's positive, but has it always been and how do you think it will shape the future for younger investors?
Yeah, so you know, it's funny. I always say so many of the early conversations about crypto would go immediately into Bitcoin and a debate about Bitcoin. And I always say, look, Bitcoin is the greatest distraction here from what is one of the most interesting technological innovations in financial services. And Bitcoin, I always say it's a bit more like religion. You can debate it back and forth and you're not going to convince one or the other. There's value in that. But put that aside for a second and look at what you could do with crypto. Just think of it as a technology that does really interesting things. My favorite example, this one I don't think has worked that well, but it gives you insight into what's coming because it will work, is if you think about what crypto blockchain does, it does three things. It has a source of truth. In other words, if I own the token, I have all rights to the token. Number two, it has the ability to execute smart contracts. So much of financial services is we the lawyers get together, you put it on a piece of paper, somebody sits in the back office, hey, has this moved in this direction, so we should collect our collateral or whatever. That all gets programmed in the token. And then finally, it has a payment mechanism and it could be a fraction of a cent in that payment mechanism. So why does that matter? My favorite example is Rihanna's NFT where I think if you owned it, you got access to 0.000033% royalties of one of her songs. Well, how does that work? The streaming service plays the song and it kicks off the smart contract and says, 'Oh, Yanni is a big Rihanna fan. He's got that crypto NFT in his wallet and I owe him a fraction of a cent.' That could not happen without the technology, and historically what happened was song royalties were owned by institutions because you as an individual couldn't invest in that. And so this is going to open up investment opportunities that the average person didn't have access to in the past. And by the way, your portfolio is going to be able to express whatever your personal views are and your personal passions. So I think that's really cool. In addition to that, the technology allows the individual to participate in things that used to just be done by the institutions, right? You needed a gatekeeper or an institution to do certain things. You can stake your assets and get a return on that. You can borrow assets. And so it's just going to enable a lot more self-directed behaviors that historically required an institution to do those things for you.
Yanni, just a quick side question. Are you a fan of Rihanna? Is that your music?
Not of Rihanna necessarily, but definitely of the future Jenny talked about and the tokenization. And you know, we started our journey in tokenization back in 2012. So immediately as I saw Bitcoin, I wrote the colored coins whitepaper which eventually Vitalik took to build Ethereum as a better system for tokenization. And very excited now to see tokenization coming to the stock markets, and we believe there's a hundred trillion dollar opportunity of tokenizing not only the stock markets, the bond markets, money market funds, investment strategies, and basically a lot of the private company shares as well as real estate. So a lot of the world's assets, if not the majority, are going to get tokenized. And I believe that's a huge opportunity both for eToro and for Franklin.
