‘Wealth Is Not Made Overnight’: Luis Maizel of LM Capital Group Shares Strategies for Productive Long-Term Investment

By Joanne Rodriguez

Luiz Maizel, Co-Founder and Senior Managing Director of LM Capital Group, has grown the company into what it is now and tells us there is plenty more to come. Even after several successful decades in the business. 

Maizel is a Mexico City-born serial investor at length and he shared his journey towards becoming one of the most prominent Latino names in the world. He refers to his business style as being ‘careful, yet assertive’, and we couldn’t agree more.

Luiz Maizel has been President of LM Capital Management since 1989 and LM Advisors Inc. since 1984. Today his company is one of the most important investment funds for Mexican people and Latinos in the United States and beyond. Maizel received a Masters of Science in Industrial Engineering from the National University of Mexico in 1971 and an MBA from Harvard in 1974, where he graduated as a Baker Scholar, the School’s highest academic honor. He also had a stint at teaching for a few years at his alumni and is still a faculty member at Harvard Business School. 

Maizel shares about his start as a financial advisor back in the 1980s. “When I went back from Harvard to Mexico, I was manufacturing agricultural equipment. The situation in Mexico got very difficult,” recalls Maizel about the water and irrigation crises of the 80s. “I was helping the person running the water department in Mexico City and realized that water was going to be a long-term problem. It was then that I decided that I wanted my family to live in the US. We came to San Diego and I started looking for a manufacturing operation.”

As Maizel spent his first few weeks looking for a venture to purchase, his contacts started approaching him for advice instead. He quickly noticed a pattern. “In July of ‘84 there was a dramatic change in the law,” he said. “They stopped withholding taxes on fixed income for nonresident aliens. All of a sudden, US brokers decided that Mexico was fertile ground. And they went there looking for clients.” 
Mexicans who knew that Maizel was in the United States immediately started reaching out for his opinion on what they were told by their own brokers. Luis Maizel found that this trust and relationship could be turned into something more lucrative. 

“It started out small. First friends and then family and pretty soon it became a full-time business,” Maizel shared. “99% of them were Mexicans - all high net worth individuals. It grew and turned into LM Advisors. In five years we raised about $600 million of assets under management.”

Maizel is quick to differentiate the split between being a broker and an investor. “We decided from day one that we were going to be on the side of the investor. We were not going to be brokers of anything,” he asserts. “I got a license for broker-dealer and a license for advisory. I have never used the broker-dealer license.”

Throughout our conversation with Maizel, it is evident that his relationships with the right people live at the forefront of his work ethic. “It's very hard to demonstrate to people that you are offering them something that's best for them if they think you're making money along the way,” he said. “So we sit on the same side of the table as them. We don't sell insurance. We don't sell annuities. We don't sell mutual funds.” This approach led to huge opportunities and growth for Maizel, as he worked towards establishing LM Capital.

In 1989, congresswoman Maxine Waters was pushing hard for minorities to start managing money and set up institutions. A broker from Merrill Lynch, who Maizel had a good and long-standing relationship with, brought up the topic of Maizel starting his own institution. “It was not a market I was familiar with and I didn’t know where to start,” he recalls. “I asked him to join me, but he didn’t want to leave his high-income role at Merill. John helped me part-time for three years and joined full-time as soon as we nailed the first client.” 

And a big first client it was. 

MTA, formerly known as the Rapid Transit District in Los Angeles, gave Maizel $5 million, and today the firm manages about $6 billion at LM Capital Management. “It's the largest Hispanic, fixed income manager in the country,” he proudly declares and rightly so. Some of LM Capital’s biggest investment management projects include managing $1 billion for Illinois Municipal about $600 million for CalSTRS. 

The employee-owned business is stirred by a consistent and active senior management team, led by Luis Maizel and co-founder John Chalker, to manage an ever-expanding portfolio of more than 31 clients comprising of foundations, hospitals, public funds, and corporations. With this in mind, we definitely needed to know how he splits his time and resources between the two major companies and keeps the scales balanced.
To this, he answered, “The nature of both companies, and their ownership, is different. LM Advisors is closer to my heart because I don’t have clients there - I have friends.” Maizel tells us that once you have the trust and friendship of somebody who is a high net worth individual, you become their advisor, their consultant, and their partner. This is a crucial piece of advice to keep in mind when managing other people’s finances for them. Even when times are tough, Maizel has a plan to keep things moving for the long term.

“2008-2009 were disaster years in finance. But our accounts remained positive,” he opened up. “We've created an image of getting good results with little risk. And everyone in the institutional markets knows that we’re the safety blanket you can depend on.” Maizel goes on to explain how this is mirrored in the firm’s real estate division, which was started during this time of recession.

“We’ve done 86 transactions over 12 years now – A little bit over $2 billion in the acquisition and about 800 million in equity. We have already closed 49 out of the 86, and they’ve either been sold or the money has been returned to the investors. And the returns have been extremely good. We’d rather pass ten deals to find a good one than make three mediocre ones,” he added.

Maizel finds opportunity in almost every market he turns to and is optimistic about the future, yet overtly cautious about whom he does business with. “We don’t do investments in countries run by a dictator that can change the financial markets by design,” he stressed. “I’m also a firm believer of diversification.” Maizel advises us to allocate different percentages to different ‘buckets’. “If you do this, then when one goes up, the other goes down and you diversify your risk.”

The businessman does not shy away from big international names either. The FAANG giants (Facebook, Apple, Amazon, Netflix, and Google) are on his radar as ones to watch in recent times of distress. “I find biotech, FinTech, clean energy, artificial intelligence, and everything to do with the cloud very interesting right now,” he added. Maizel also recently drove a Lucid and is eager to see where EFTs and the electric car markets go. 

With no shortage of items to do on his list and ventures to invest in, Maizel says the key thing to remember is “Don’t try to become wealthy overnight”. He is astutely careful yet resilient with whom to work with, and his advice to those looking to invest is this: “If you aim for home runs, you tend to strike out more often. Make sure that you hit a lot of singles and doubles along the way, and eventually, you're going to hit a couple of home runs.”