By Kalpi Prasad | Founder, Renown Lending & Renown Wealth | Adelaide, South Australia
Reading time: 8 minutes
I have a question for Australia’s financial advisers. It is not a hostile question. It is a genuine one, and I ask it because the answer matters to your clients.
When was the last time you seriously evaluated private credit for a client portfolio?
Not dismissed it as too risky. Not deferred it because it felt unfamiliar. Not avoided it because the compliance burden seemed uncertain. Actually evaluated it — the return profile, the risk characteristics, the role it could play in a well-diversified portfolio — with the same rigour you would apply to any other asset class recommendation.
If the answer is recently and thoroughly, you are in the minority. And your clients are better off for it.
If the answer is never — or a long time ago, based on outdated assumptions — then I would suggest, respectfully, that you owe it to your HNW clients to reconsider. Because the private credit market of 2025 is fundamentally different from the one many advisers formed their opinions about, and the cost of that knowledge gap is being borne by the people who trust you with their financial future.
The knowledge gap is real
Let me be clear about what I am observing, because it is not an abstract concern.
I speak regularly with HNW investors — the kinds of individuals who hold $3 million, $5 million, $10 million or more in investable assets. Many of them work with financial advisers. And many of them tell me, consistently, that their adviser has either never raised private credit as an option or has actively discouraged it.
When I ask what reasons were given, the answers tend to fall into the same handful of categories:
“My adviser said it’s too risky.”
“My adviser said it’s not regulated.”
“My adviser said there’s no track record.”
“My adviser said to stick with what we know — shares, bonds, and property.”
“My adviser didn’t mention it at all.”
Each of these positions was arguably defensible five or even ten years ago. None of them is defensible today.
The five misconceptions advisers need to abandon
Misconception one: private credit is inherently high-risk.
This is the most common and the most damaging misconception. It conflates all private credit into a single risk category, which is like saying “equities are high-risk” without distinguishing between a blue-chip dividend stock and a pre-revenue tech startup.
Senior secured first mortgage private credit — lending against established property at a 60% to 65% LVR — is one of the most conservative income-generating instruments available. The equity buffer protecting investor capital is substantial. The security is tangible and realisable. Historical loss rates on this type of lending in Australia have been very low.
Yes, mezzanine debt is higher risk. Yes, unsecured corporate lending is higher risk. But advising a client that “private credit is too risky” without distinguishing between these fundamentally different instruments is not conservative advice. It is uninformed advice.
Misconception two: private credit is unregulated.
Private credit fund managers in Australia hold AFSLs issued by ASIC. Lenders who provide credit to consumers hold Australian Credit Licences. Fund structures are governed by trust deeds and constitutions. Investor funds are held by independent custodians in well-governed funds. And ASIC has explicitly identified private credit as a priority area for supervisory focus, with more prescriptive regulation in development.
Private credit is less heavily regulated than the banking sector. That is true. But it is not unregulated, and advising clients on that basis is factually incorrect.
Misconception three: there is no track record.
Australian private credit funds have been operating for well over a decade. The institutional segment of the market — managed by large, established fund managers — has track records spanning multiple economic cycles, including the GFC, COVID, and the 2022-2024 rate hiking cycle. The data exists. The performance history is verifiable. Advisers who say there is no track record have not looked for one.
Misconception four: it is not suitable for retail or HNW clients.
The institutional adoption of private credit by Australia’s largest superannuation funds — managing the retirement savings of millions of Australians — is itself a powerful rebuttal to this position. If AustralianSuper and Aware Super consider private credit suitable for their members’ retirement savings, on what basis does an adviser conclude it is unsuitable for a sophisticated HNW client with a longer time horizon and greater risk capacity?
The answer, in many cases, is not that it is unsuitable. It is that the adviser lacks the knowledge or the approved product list to recommend it.
Misconception five: the compliance and due diligence burden is too high.
This is perhaps the most honest of the five objections, and the one I have the most sympathy for. Private credit due diligence is genuinely more complex than evaluating a listed managed fund. There is no Morningstar rating. There is no standard performance benchmark. The documentation is bespoke rather than standardised.
But this is an argument for developing capability, not for avoiding the asset class entirely. Advisers who serve HNW clients have a professional obligation to understand the investment landscape their clients operate in. If private credit is a legitimate, growing, and potentially beneficial asset class for those clients — and it is — then developing the capability to evaluate it is part of the adviser’s job.
What advisers should actually be doing
I am not suggesting that every adviser should immediately recommend private credit to every client. That would be irresponsible. I am suggesting a structured approach to building the knowledge, the due diligence framework, and the approved product list that allows advisers to evaluate private credit objectively and recommend it where appropriate.
Educate yourself on the asset class. Read the research. Attend the industry events. Speak to private credit managers — not to be sold to, but to understand how the products work, what the risks are, and how returns are generated. The knowledge base required to evaluate private credit competently is not trivial, but it is not insurmountable either. It is comparable to the knowledge required to evaluate direct property, infrastructure, or private equity.
Develop a due diligence framework. Create a standardised process for evaluating private credit managers and products. This should cover: regulatory status (AFSL verification), investment strategy, credit process, valuation methodology, loan book composition and concentration, arrears and default history, fee structure, liquidity terms, redemption provisions, custodian arrangements, and auditor details. Apply this framework consistently to every private credit product you evaluate.
Understand the client suitability criteria. Not every client is suitable for private credit. The investment requires a wholesale investor qualification, a genuine capacity to hold illiquid positions, and a portfolio context in which private credit adds value rather than creating concentration or liquidity risk. Develop clear criteria for when private credit is appropriate and when it is not.
Build your approved product list deliberately. Start with two or three private credit managers who meet your due diligence standards. Conduct a thorough evaluation. If they pass, add them to your approved list. You do not need to cover the entire market — you need to have a small number of high-quality options that you understand deeply and can recommend with confidence.
Have the conversation with your HNW clients. Once you have developed the knowledge and the product list, raise private credit proactively in your client reviews. Do not wait for the client to ask — many will not, because they do not know enough about the asset class to formulate the question. But if you believe it could benefit their portfolio, it is your professional obligation to raise it.
The cost of inaction
The opportunity cost of ignoring private credit is not theoretical. It is quantifiable.
Consider a HNW client with $5 million in investable assets, currently allocated across ASX equities, international equities, fixed income, and cash. The portfolio generates an average return of 7% per annum — a reasonable assumption for a balanced allocation over the medium term.
Now consider the same client with a 20% allocation to private credit — $1 million — generating a net return of 9% per annum. The remaining $4 million continues to generate 7%.
The blended portfolio return increases from 7.0% to 7.4% per annum. Over ten years, on $5 million, that 0.4% improvement generates approximately $300,000 in additional wealth. Over twenty years, the difference exceeds $800,000.
These numbers are illustrative, not guaranteed. But they demonstrate a fundamental point: the cost of not including private credit in a suitable client’s portfolio is not zero. It is a measurable reduction in long-term wealth accumulation that the client bears — often without knowing what they are missing.
Addressing the compliance concern directly
I understand that for advisers operating under an AFSL — whether their own or a licensee’s — recommending private credit involves compliance considerations that listed products do not.
The approved product list (APL) is often the binding constraint. If a private credit product is not on the APL, the adviser cannot recommend it — regardless of their personal assessment of its merits. This is a structural issue that licensees need to address. If the APL does not include any private credit options, the licensee is effectively preventing its advisers from accessing a legitimate and growing asset class on behalf of their clients.
Advisers who operate under their own AFSL have more flexibility — but also more responsibility. They must conduct their own due diligence, document their research and reasoning, and ensure that any recommendation is appropriate for the specific client and consistent with the best interests duty.
The compliance burden is real. But it is manageable. And it is not a legitimate reason to deny clients access to an asset class that could meaningfully improve their financial outcomes.
A note on conflicts of interest
I want to address an uncomfortable reality that influences some advisers’ reluctance to recommend private credit.
The fee structures in financial advice — particularly trail commissions and platform rebates associated with listed managed funds and wrap platforms — create incentives that do not always align with recommending illiquid, off-platform investments like private credit. An adviser whose revenue is partly driven by funds under management on a platform has a structural disincentive to recommend an investment that moves capital off that platform.
I am not suggesting that this conflict drives all or even most advisers’ decisions. Many advisers act with complete integrity regardless of fee structures. But the conflict exists, and clients should be aware of it. If your adviser has never mentioned private credit, it is worth asking why — and whether the answer is genuinely about suitability or partly about business model.
The conversation this industry needs to have
The financial advice industry in Australia has undergone enormous reform over the past decade. The Future of Financial Advice (FOFA) reforms, the Royal Commission, the transition to a profession with education and ethical standards — all of these have raised the bar for what clients can expect from their advisers.
Private credit is the next frontier of that evolution. It is an asset class that HNW clients are increasingly asking about, that institutional investors have already embraced, and that — when accessed through quality managers and structures — can genuinely improve portfolio outcomes.
Advisers who develop the capability to evaluate and recommend private credit will differentiate themselves in a competitive market. Those who continue to ignore it will find their clients seeking that capability elsewhere — either from other advisers, from private banks, or by investing directly without advice.
The choice is the same one it has always been in financial services: lead, or be left behind.
Kalpi Prasad is the Founder of Renown Lending and Renown Wealth, and co-founder of Renown Mortgages. Renown Lending operates offices in Adelaide, Sydney, and Melbourne, with expansion into Singapore and Dubai underway. This article is general in nature and does not constitute financial advice. Financial advisers should form their own independent assessment of any investment product before making recommendations to clients.
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