Jefferies CEO Richard Handler dishes on M&A outlook, talent wars, and the book every young banker should read right now

Richard Handler

Richard Handler has had a busy year.

He helms Jefferies Financial Group, which recently turned in record second-quarter results.

Under Handler’s leadership, the firm’s investment-banking revenue has grown from $91 million in 2000 to more than $3.5 billion over the past 12 months, according to Jefferies data. (Handler became CEO in 2001.)

Meanwhile, the chief exec also finds time to maintain an affable persona on Instagram

While most Wall Street CEOs are known more for their discretion than their witty social-media contributions, Handler has addressed sensitive subjects like race, gender, and burnout, becoming a mainstay in the comments sections of Instagram pages like @WallStreetConfessions.

Throughout the pandemic, he’s hosted virtual lunches for followers of the Instagram page Litquidity, encouraged Jefferies’ 2020 summer interns to spend half their virtual programs doing philanthropic work, and offered all of the firm’s analysts and associates their choice of upscale gifts, like Peloton exercise bikes.

The firm has also been hiring dealmakers from firms including Credit Suisse and Deutsche Bank.

We asked Handler to answer 10 questions via email on a variety of topics, from senior-banker recruiting to what he was binging on Netflix. Here’s what he had to say.

Interview lightly edited and condensed.

Jefferies has recently been ramping up recruiting from Credit Suisse as the Swiss bank has been trying to recover from its Archegos scandal earlier this year. What appealed to you about those specific bankers?

We are always recruiting, and this year is no different with our net headcount up about 10 percent. No one competitor has accounted for more than a few percent of our YTD hires.

Recently we have hired quite a number of high-quality professionals who have deep industry expertise. These hires are complementary to our existing team, have earned strong personal trust with their clients, are team players, and are impeccably competent and honest. We avoid senior people who have acted as "short term mercenaries" with many career stops on their resume.

Instead, we prefer to recruit those who have been loyal to their firms and their clients over the long-term. As is the case in our volatile industry, missteps by their firms sometimes cause these people to lose confidence, and that presents an opportunity for Jefferies and others.

I believe people join Jefferies not only because we can provide their clients with every product, service and resource they need, but also because they know they can make a difference at our company. They can enjoy our culture and truly help us as partners in building our firm.

In the end, it’s about enjoying the people you work with, serving your clients, being treated fairly and transparently, and being proud of your firm and career.

You’ve been building out your financial-institutions group heavily with these additional managing directors. What opportunities do you see in the space?

We have been building every industry vertical aggressively for the three decades I have been at Jefferies.

In the last 10 years, we have hit critical mass, and after years of extremely hard work by many people, we have over 1,100 investment bankers with LTM revenues in this business alone approaching $4B.

This year we are ranked #7 among U.S. investment banks in revenues. 

Our recent hires in FIG are super high-quality people. Their clients trust them, and their expertise is world class and completely complementary to our existing team, which, by the way, is also very high quality. 

We are fortunate to have this opportunity to expand in an area that we believe is ripe for growth as the world navigates a (hopefully) post-COVID demand for financial-services solutions.

How do you see the Biden administration’s recent executive order calling for heightened scrutiny of bank mergers impacting M&A among financial institutions? 

We think the US has done an excellent job post 2008 regulating the financial services industry.

Almost all of our competitors are healthy, have robust liquidity, strong balance sheets, and have been able to remarkably support their clients, even during a pandemic.

Fintech is evolving constantly and brings an entire new set of opportunities. I think the regulators will make sure the existing companies are secure and be smart about securing a level playing field for the new ones.

Smart regulation is good for the long-term business success in the financial-services industry.

As we head into the second half of 2021, what other coverage sectors at Jefferies are primed for expansion?

When I started at Jefferies in 1990, we had a few hundred people and that had grown to over a thousand when my partner Brian Friedman joined in 2001. Every day he and I work with all of our senior partners and recruit constantly.

That said, the most important thing we can do is remember that our number-one priority is our existing team as they are the ones that allow us to serve our clients and stay strong enough to keep methodically building. They also are the ones who embrace our new people as partners and help them make a quick and effective transition to Jefferies.

I would love to name the names of the countless people at Jefferies who have gone beyond the call of duty these past 18 months to thank them. Instead, I think I will do it individually one by one. It will take a very long time.

What’s your outlook for M&A in the second half of the year? Do you have any concerns that the rise in the Delta variant could be a dampener on further dealmaking?

We are seeing continued M&A activity throughout the year and don’t believe this is a short-term trend.

COVID has created winners and losers, often resulting in mergers. Scale has never been more important. Buyers have strong currencies with the stock market at near all-time highs. Technology touches every company and creates potential synergies. Capital markets are highly functioning and private equity has money to spend on new deals and great companies to monetize as they return capital to their stakeholders.

The Delta variant is horrible, and vaccines are the way for us to get past this, eventually. However, even with the variants, the enormous amount of macro factors favor future activity and momentum in M&A globally. We are positioning Jefferies to continue to be even stronger in this area to help our clients.

Let’s talk burnout. A schism has emerged on Wall Street, between those who side with junior bankers against the industry’s demanding culture and those who defend it. Where do you fall?

I worked incredibly hard out of the University of Rochester as an analyst at First Boston and as an associate out of Stanford Business School working for Mike Milken at Drexel. The hours were insane, and in hindsight the experience was remarkable. That said, it was a different time in our industry and in the world.

Our industry will always be incredibly demanding because we are fortunate to deal with the most important issues facing CEOs and investors. All this said, I am a believer in work hard, play hard, and having time to rejuvenate.

We want our people happy and healthy for the long term. There are periods of time when work must be the overwhelming priority, but we are striving as an organization to help our juniors with their mental and physical health, ability to disconnect from the pressure, career training and mentoring, and flexible work options.

We have not broken the code yet, and we are far from perfect, but our intention is to help our most important asset at Jefferies, our people, be able to have long-term, sustainable and rewarding careers. Our people demand it and deserve it. 

Jefferies offered all of its junior bankers gifts, like a Peloton, earlier this year, but the labor market for junior bankers has continued to tighten considerably. What else will bank executives have to do to keep younger talent from heading for the exits?

Treat them with respect and prove to them that a career in finance can be an incredibly rewarding path as opposed to just a gateway to something else.

Throughout the pandemic, you spoke and wrote in your leadership letters about the importance of valuing what really matters. What are those values to you? Can you name a few lessons you’ve taken from this past year?

The values that are important to me are: 1) Integrity; 2) Keeping our people safe, engaged, constantly learning, growing, and rewarded fairly; 3) Making sure people have enough time for family, friends, and philanthropic priorities. I want our people to be treated as I would want to be treated. 

The three lessons I have learned from this past difficult period are ones that I knew before, but have truly been reinforced in a manner that only a pandemic can accomplish: 1) Everything in life is fragile so spend time with the people who bring you positive energy and stay away from those who only dwell on the negative. 2) Human contact is precious so never take it for granted. 3) The future is our youth and we must all do our fair share to help prepare them for the future they will inherit.

What’s the most important book you’ve read lately, and the most important book every young banker should read right now?

I’m incredibly biased, but even if I didn’t know the author, my wife, Martha Hunt Handler, just wrote a book called "The Winter of the Wolf" which is available on Amazon. It is a spiritual novel that addresses life’s challenges, our bond with nature, grieving over loss, and optimism about the future. It is amazing, just like my wife.

Every banker should read "The Richest Man in Babylon" by George S. Clason. It is a short parable that will only take a few hours to read, but it simply explains the virtues of being long-term oriented in everything you do versus the world’s overwhelming desire for everything to be instantaneous and short term.

It has probably helped me stay at the same company for 31 years, remain close to my original childhood friends, be happily married for over 33 years, stay loyal to the university that educated me, and create enough wealth to do good things with.

Name a few television shows or movies for us that you and your family have recently gotten to take in together.

I don’t watch a lot of TV. I loved "The Queen’s Gambit," but who didn’t?

I really spend all of my free time stalking my children to hang out with me. Working out on a trampoline at my favorite gym @thenessnyc (in Tribeca or virtually). Obsessively completing Liberty Jigsaw Puzzles.

Writing down random lists that come into my head and oversharing them with our clients, my Jefferies partners, or a wider audience of younger folks. Enjoying my scholarship students at the University of Rochester where I work as a Trustee.

Doing random ridiculous things like hanging 100 different bird feeders on our Westchester property. Taking walks with my wife and our rescue dogs. Supporting my wife’s charity @wolfconservationcenter (helping the environment by protecting the apex predator).

Hanging with my clients who are all friends. Posting comments on a handful of meme accounts via my@handlerrich Instagram. 

That’s my life outside of a lot of work. I’m a lucky guy.

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Reed Alexander July 23, 2021 at 10:21PM

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