Starting My Own Business

Gerardo Chapa

Since graduating from GSB in 1985, I have developed a career in private wealth management, based in Houston, Texas, with a clientele primarily in Mexico.

I started with Goldman Sachs and then continued with Kidder Peabody, which became Paine Webber and then UBS USA. During the period between 1991 and 1993, my team and I did very well thanks to the flexibility that the management team at Kidder/GE Capital gave us, namely by letting us conduct a business with an open architecture approach to trading in Latin American fixed income securities. As the number of clients kept growing, our requests for more products and flexibility on the structuring and lending side of the business also increased.

During those years, the Mexican economy was booming with the signing of NAFTA and the privatization of Telmex and the banking sector. This development also allowed us to do business with American and European investors who wanted to invest in Mexican securities.

Our clients’ financial needs continued to grow, and one day I walked into the manager’s office with a request from an important client. After a few days, the manager came back with a negative response and, noticing my disappointment, told me that my group and I should start our own business. I didn’t react until the next day, when I walked back into his office and asked why he made that comment. He said, “I think you and your group should explore it because that might be the best way to service your clients,” adding that, if I committed to embarking on this venture, he could help guide me.

I was intrigued but decided to think about it and came to the conclusion that, if he had the blueprint to start an independent wealth management business, then he must have explored it and decided not to do it. I needed to understand why, so I went into his office and asked him.

He explained that it had simply been a matter of timing – he was too old, too busy, and the risk was too great. I, on the other hand, was only 33 years old, and I was motivated to give it a shot.

He gave me several booklets that explained how independent broker-dealers can clear trades and introduce clients to a Wall Street firm that would service the clients’ assets in individualized accounts.

Twenty-six years have now passed since my two partners and I founded Global Financial Services. Both of them have retired but have transitioned their books of clients to their respective teams. It has been a great ride, which I still enjoy most of the time. Every day is different – we survived the crash of 1987 (while at Goldman), the Mexican peso devaluation of December 1994 (five months after starting our firm), the Russian bond crisis in 1998, the attacks of September 11, 2001, the 2008–09 financial crisis, and now the 2020 coronavirus pandemic.

We also survived an event in which a junior employee made an errant trade for a group of clients; my partners and I made the clients whole and had to contribute additional capital to the firm. Every time we had a crisis, I would go back and read some of Professor Jack McDonald’s case studies and books. The Tulipmania case study was my favorite one. Professor Pascal’s negotiation class was also very useful over the years, from buying a house to trading illiquid Latam bonds.

We now manage over $4 billion in client assets of families who have been, in many cases, with us for over thirty years. Hence, we are managing investments for the third generation of those same families.

Hopefully, the next generation of partners at Global can help the firm continue to service our clients successfully for another twenty-five years. We have worked very hard and have always done the right thing for our clients, but I must admit that there have been many people and circumstances (luck among others) that allowed this to happen.

We do not control our businesses and our lives as much as we would like, as we have just been reminded in the last three months. Therefore, now more than ever, I realize that I need to look around and try to help others. The message is that the story does not end with a successful or unsuccessful business career; that is just a vehicle to be able to positively impact others’ lives.

Business success or failure can both help develop the resources, skills, temperament, and desire to achieve more important goals.

I have never seen the world change as fast as in the last two years, and the next twenty-five to thirty years will likely be very different given the tremendous change that is occurring in the world.

On the personal side, my wife Gelines and I have four children, all boys; two are married and each one has a boy and a girl for a total of four grandchildren. We continue to live in Houston but we commute frequently to Monterrey, Mexico, where we have a second home. I started to play golf more often and have enjoyed playing during this pandemic, since it has been one of the few activities that have not been interrupted in Texas. We have developed a long-lasting friendship with Simon and Sandy Upfill-Brown; our kids and theirs are very good friends as well. We often see Willie and Mary Ann Langston at fundraisers and social events. On the professional side, I also stay in touch with Sam Sandler and Paul Arango.

Best regards to all of my classmates. I hope to see you in person soon.