Jefferies Committed to Wealth Management, Executive Says
Despite its small size relative to both the broader wealth industry and its parent firm, private wealth management at Jefferies Group is flourishing, according to the former Morgan Stanley executive who runs the 44-advisor business.
Assets managed by the advisors have more than doubled since Peyreigne’s arrival to $16 billion from $6 billion, he said, and revenue has more than doubled to $100 million from about $45 million over the same time. Production per advisor averages around $2.3 million, surpassing the million-dollar-plus averages at industry whales such as UBS Wealth Management USA, Merrill Lynch and Morgan Stanley. Parent firm Jefferies Group reported $5.2 billion in annual revenue in 2020.
Peyreigne, who spent the first half of his career at Kidder, Peabody and successor firm UBS Financial before joining Merrill and then Morgan Stanley, flaunted the statistics on the eve of announcing a new addition to Jefferies’ small force. Solo practitioner Arturo Padilla, a $2.5 million-producer who had spent his 12-year career with HSBC Private Bank in Miami, joined Jefferies on Friday. He had a $600 million-asset book at HSBC, Peyreigne said.
But the manager concedes that growth of his advisor force has barely kept pace with departures and retirements since his arrival. Market growth and growing “wallet share” from clients moving assets from other firms to take advantage of Jefferies’ trading and middle-market investment banking mandates have been responsible for much of his unit’s revenue growth, he said.
“I’m not in a position to compete with the ridiculous 350% deals on the table from some competitors,” Peyreigne said. “There are a lot of brokers who are myopically focused on deals. It’s not the way I run the business.”
He pitches to advisors the clarity of Jefferies’ pay structure, saying it does not have ‘non-compensable’ revenue that falls through cracks at wirehouse firms.
He did not disclose Jefferies’ deal and payout parameters, but said that Padilla’s hire indicates that the firm is positioning itself to compete for brokers with overseas clients. Jefferies hopes to attract international brokers from Wells Fargo Advisors, which is shuttering its foreign client practice.
Dallas-based broker, Clark R. Durham, who had managed around $225 million in assets, left Jefferies in January to join Stifel Nicolaus. Eric K. Osserman, a 26-year industry veteran who like several Jefferies brokers worked early in their careers at Donaldson, Lufkin & Jenrette Securities and Credit Suisse—and who joined Jefferies in 2009 from Deutsche Bank—retired in February.
Morgan Stanley also has competed aggressively for the Wells international brokers, as have boutique firms with international specialties. Independent broker-dealer Insigneo on Wednesday hired Alain Guerra and Edward Varona, a Wells team in Miami that managed $345 million for clients in Colombia, Argentina, Ecuador, Venezuela and the U.S., the firm said earlier this week.
Guerra and Varona had been with Wells for their entire 17- and 12-year careers, according to BrokerCheck.