How do we think about private credit for clients?

Private credit has become one of the most talked-about asset classes in wealth management. But most of the conversation is either too promotional or too dismissive. Here's how we actually think about it.

What private credit is

At its simplest, private credit means lending money outside of the traditional banking system. Instead of buying a bond on a public exchange, you're participating in a loan directly — often to mid-sized businesses that need capital for growth, acquisitions, or refinancing.

Who it's appropriate for

Not everyone. Private credit involves illiquidity — your money is locked up for a period of time. It also involves credit risk that's harder to evaluate than a publicly traded bond.

We generally consider private credit for clients who have sufficient liquidity in their traditional portfolio, don't need the invested capital for several years, and can absorb the complexity in their tax situation.

How we evaluate deals

We don't just pick whatever's available. We look at the underlying borrowers, the loan covenants, the fund manager's track record, the fee structure, and — critically — how the opportunity fits within the client's overall portfolio and tax picture.

We've passed on plenty of private credit deals that looked good on paper but didn't fit our standards or our clients' situations.

The honest version

Private credit can be a genuinely valuable part of a portfolio. It can also be oversold by advisors who earn higher fees on these products. We use it selectively, explain it clearly, and never recommend it to clients who don't need or understand it.

If you're hearing about private credit from your current advisor, we're happy to provide a second opinion on whether it makes sense for your situation.