Photo by Jeff Hobson

Stacy Allred has dedicated the last 20 years to helping ultra-high net-worth families — generally defined in the industry as having a net-worth of $25 million or more — take a holistic approach to managing their assets. As the leader of the Bellevue-based Merrill Center for Family Wealth — a Merrill Lynch group with offices in New York and Miami that helps families define the purpose of their wealth — Allred has been so successful in her work that colleagues have dubbed her “The Billionaire Whisperer.” 

Candidly, Allred said that while she finds the moniker flattering, she feels it puts a bit too much focus on the money. “When people say that, it makes me blush a little bit,” she admitted, “because my emphasis is so much on the family.”

After receiving a master’s in taxation from DePaul University, Allred got her start as a senior manager at Ernst & Young in San Francisco, later joining Merrill Lynch as a director in 1999. Working in the field of wealth management during the ’90s dot-com boom in the San Francisco area proved to be an interesting time for Allred. She said she found that traditional financial-planning tools weren’t sufficient to address the questions her suddenly wealthy clients were asking.

“The traditional (financial planning) field is more of a structuralist approach, more analytical,” Allred explained. “That’s the training that I had, and it wasn’t until I was working in an extreme situation with the dot-com (boom) where it became so obvious to me that that was not enough, and that I was missing a big piece of it by not taking a holistic approach and looking at those qualitative issues.”

Those early interactions with clients encouraged Allred to dive into the qualitative side of financial planning. And her initial efforts to address her clients’ concerns about the impact of wealth on their families led her down the path that would come to comprise the bulk of her career. The holistic approach to wealth management that Allred has spent the better part of two decades developing — and that led her to found the Merrill Center for Family Wealth in 2014 — blends psychology, behavioral economics, family systems, parenting, and the science of learning in order to help wealthy families effectively manage their assets in a way that reflects their values.

At the Merrill Center for Family Wealth, Allred leads a cross-continental team of seven, with consultants based in New York, Miami, and Bellevue. Allred’s work providing wealth strategies to the ultra-wealthy takes her across the country, from bootcamps hosted at major universities to yachts and vacation homes, where she helps facilitate multigenerational conversations around wealth management. 

“I started off doing tax returns, and admittedly, I enjoyed that,” Allred said. “But I thought of that as a career. And as I’ve moved into this space … sitting in the living rooms or vacation homes of families and having these really meaningful conversations, that’s probably my favorite part about this work. In today’s day and age, where everyone is so busy, a lot of conversations can stay at more of a surface-level. You create the space to go deep and to have this more meaningful dialogue.”

Allred spoke with 425 Business about her work to create a more qualitative approach toward financial planning; the top concerns of her wealthy clients; and her pioneering efforts in the field that have earned her that somewhat-embarrassing, yet spot-on nickname.

Q: What sent you down the path of taking a more qualitative, holistic approach to financial planning?

A: (I) was in San Francisco at the height of the dot-com (boom), and for the first time in my career, my clients were no longer my father’s age, but my age and younger. It was a really interesting time, as newly created wealth was all over. You would work with a client who had gone from selling their bike to pay the rent on their studio apartment to buying a $5 million house (or) someone who had done their own tax return on TurboTax to now having a very sophisticated tax situation. The rapid change was a bit overwhelming for families. So I was designing these very detail-oriented, analytical financial and estate plans, and while I had started with goals and objectives, I found firsthand that that was not enough. The questions I was getting that my plans were not addressing, and that family’s energy was behind, were questions like, “What impact does my wealth have on the motivation of my 21- and 25-year-old?” And it was those qualitative questions that I kept getting and observing firsthand that that’s where the energy was. And one day, I had the realization that if I wanted to be helpful in this space, I better figure out the answers to some of these questions.

Q: What do advisers gain by taking a holistic approach to management rather than the traditional, more structuralist approach?

A: If you look at how the family is measuring success and what their top priorities are, if you’re not taking that holistic approach, you’re missing the family’s top priorities. Because it’s not about the money. I was just with a family and they said, ideally, they would like the money to be intact and the family unity to be intact, and the family members to be flourishing. But if they had to give up one thing, if they couldn’t have all of that, they would give up the money. So if I’m taking a structuralist approach and I’m focused only on the money, then I’m not focused on what’s truly most important to that family. To most families. Not all, but most families.

If I can step back and take a human-centered approach and really understand the top priorities and what’s truly most important to that family and have dialogue around that, I’m a more effective adviser, I’m adding more value to the family, my work is more interesting. You’re having greater impact, and that’s where the richest conversations happen, the work becomes so much more meaningful. 

Q: A lot of your work focuses on untangling assumptions about wealth that might impede a family’s ability to effectively manage it. How does this play out in your practice?

A: {In) one family I worked with, the family felt guilty around the level of wealth they had inherited, and so they weren’t actively managing it. They were kind of ignoring it. And then the question is, “How do you take this resource and integrate it into your life in an effective way, in a way that’s effective for you, your family, your community?” It was really by taking this more holistic view, getting clarity on the purpose of what wealth meant to them, and then involving all family members — all young adults and older family members — in dialogue to co-create the road map that they wanted for their future. 

Q: How do you manage the tricky conversations that arise when you’re discussing a sensitive subject like wealth, especially in an inter-generational family setting?

A: When you talk to families with newly created wealth, one of their core concerns is, if family members knew about the money, it might undermine their growth and development. And so they don’t have a model around how to communicate effectively; they’re nervous about the potential negative impacts and so they don’t say anything. One of the things that our group has is a series of frameworks … that help families more effectively navigate wealth.

A quick example would be the light switch versus the dimmer switch. One of the myths is that when you have this conversation (about the family’s wealth), it’s this big reveal. Certainly, that’s one way to do it, to share everything all at once — the light switch, either it’s on or it’s off — but another way to do it is the dimmer switch, which is a series of thoughtful conversations over time. If I can reframe that idea for a parent, suddenly it opens a door, the light bulb goes off, and now they have something that feels accessible and doable. 

It’s starting not with dollar amounts, but with what is most important in the family, the values and philosophies and operating principles of the family. And we think that that’s a nice starting point, and then slowly you’re working into more detail.

Q: So much of your work centers around family culture. How do you initiate the process of shifting family culture in a way that’s going to effectively help with managing family wealth? 

A: There’s a saying within the field, and Matt Wesley, one of the team members of the center who’s done some work around this, has said, “Culture eats structure for breakfast.” We’ve found that that’s really true. You can set up beautifully crafted trust, gift, and estate plans and have really sophisticated investment strategies, but if you don’t have an effective culture for the family, it can undermine all of the work that goes into that planning. A well-crafted trust isn’t a guarantee that it will have a positive impact on the family member. It really takes a culture for that. It takes a culture of curiosity, of lifelong learning, of being willing to have the courageous conversation, to work through conflict, to have that balance of helping family members grow and develop and individualize and be part of the family group, and when necessary, put the family first. It’s this lifelong journey that really starts with the family leadership. And culture is something that if you change one thing in the family system, it can have a domino effect. And so, if the culture isn’t today what you want it to be, the good news is that small moves can have a big and lasting impact if you’re intentional about it. 

Q: With all the different frameworks and fields that you bring to your practice, are your clients ever surprised about the perspectives you’re bringing into sessions? 

A: Yes. In fact, at a UCLA bootcamp one year, the women’s bootcamp, one of the participants raised her hand as I was presenting … and said, “I never thought while I was spending all my time and energy creating this wealth and building my business that it would be more time and energy afterwards to manage it and the impact on the family.” She was really surprised. So I paused and asked the rest of the group, “How many of the rest of you feel that way?” The majority of the hands went up. And I think that it’s kind of an overlooked fact, that when people are creating business, it’s so time-consuming and it’s a core focus. They don’t often have time to look back and reflect and think about the implication of that wealth once it’s created. To me I view it as, they’ve already had one extraordinary outcome by creating the wealth, and now they’re looking for a second extraordinary outcome, which is that wealth having the positive impact on the family members and for some of them to sustain it for important things like education, healthcare, first-time homes, and giving back to the community. And that second extraordinary outcome they’re looking for also takes a fair amount of work. 

Q: It seems like it’s almost a different set of skills necessary to generate wealth versus sustain it. 

A: I do agree with that. The skills to create wealth are different than the skills required to sustain wealth. To sustain it requires empowering the rising generation and really focusing on the human capital within the family. One of the sayings in our field is, “The first generation creates the wealth. The second generation creates the legacy.” It requires a lot of respect from that first generation to the second generation to empower them, to share information, to do that skill building, and to have that second extraordinary outcome to sustain the wealth. (Including the younger generation in family meetings) is a big sign of respect for that rising generation, and yet I appreciate that it can be difficult. A lot of wealth creators like control, and this requires them to release some of that control and empower the rising generation in age-appropriate ways, like safe to fail experiments or that dimmer switch approach.

Q: Especially for new wealth creators, moving from selling items to pay rent to wanting wealth to sustain for generations is a totally different mindset. How do you get people to start making that shift? 

A: We wrote a recent paper called “Spending Well: How thinking like a CEO can change your financial life.” And we wrote it because I got a question from a client around the lines of, “How much should we spend on a hotel room?” They had an opportunity with a beautiful but really expensive hotel room. And (the question) wasn’t “How much can I (spend)?” because clearly, they can spend a lot on a hotel room. It was, “How much should I (spend)?” And as we look to see where’s the guidance on spending in an ultra-high net-worth family, most of the guidance around spending is around budgeting. When those natural guardrails are taken down, it requires a deeper level of thoughtfulness to determine what you should do. It’s no longer driven by necessity, but it’s driven by values. And so, it requires you to go deeper in thinking about your values. And families that have that second extraordinary outcome will take a longer-term view. They’re setting not just themselves up for success but future generations up for success.

Q: How much of your financial advice strictly applies to high-net-worth individuals, versus something anyone can adopt? 

A:

A lot of it is really applicable regardless of your balance sheet. Being clear on your values and operating principles is universal. Effective decision making is universal. The biases, we all have them. I think that money’s a magnifier, and the bigger your balance sheet, the more these things get magnified, but they are universal. … Where it gets more specific to a family of wealth is around the shared assets and the skills required to manage money and trusts. I asked the rising generation at the bootcamp, “Is being in a family of wealth different or the same as winning the lottery?” And they all agreed that it was different. Because in the lottery, you’re getting cash, and in a family of wealth, oftentimes, you’re getting structures. … And all of those structures require skills. To effectively integrate wealth into one’s life, you have to build financial skills, wealth skills, governance skills, business skills, and philanthropic skills. And so that’s a lot of our work, to help families (create) roadmaps to build those skills.