By Dara Akhavein, Student, University of Southern California
Private credit has moved from the margins to the mainstream, and it is here to stay. AltsLA 2025 started one month ago today, and there are several takeaways worth revisiting, but one overarching message was unmistakable: private credit is no longer a niche strategy, but a foundational pillar of modern portfolios. What was once considered a single asset class is now recognized as a diverse ecosystem, shaped by varied strategies, structures, and investor objectives.
As institutional adoption matures, the next frontier is unfolding: bringing private credit into the wealth management and retail channels. This shift is not only about broader distribution; it is also about reshaping access to one of the most resilient and customizable sources of capital in today's markets. Yet with expansion comes divergence. The industry is bifurcating between firms with the depth and discipline to thrive across market cycles and those unprepared to meet scale and complexity demands. Panelists offered valuable perspectives on what makes private credit fundamentally compelling, why it is gaining traction with wealth managers, and which attributes will separate the winners from the rest.
The Fundamental Value of Private Credit
Private credit continues to gain ground because it offers what public credit cannot: flexibility, control, and structure tailored to today's complex market environment. Panelists outlined five key advantages reinforcing the asset class’s foundational value.
Customization & Structuring Power: Private lenders negotiate directly with borrowers, unlike public markets, which are bound by standardized issuance. This enables bespoke deal terms. Payment-in-kind (PIK) toggles, equity kickers, and covenant packages can be tailored to match risk appetite with return expectations. This creative flexibility is especially valuable in nuanced or transitional situations.
Yield with Downside Protection: Private credit offers elevated yields with structural safeguards. Seniority in the capital stack and significant equity cushions below the debt provide a layer of insulation that is difficult to replicate in public credit. As Owen Libby noted, “That equity would need to vaporize before creditors are impacted.” Investors are compensated for accepting illiquidity but not for taking uncompensated risk.
Control & Engagement Throughout the Lifecycle: From origination to enforcement, private credit investors maintain a seat at the table. This control allows for proactive management, whether that means negotiating amendments, intervening early on signs of distress, or shaping workout strategies. That engagement is increasingly important in a volatile and rate-sensitive world.
Time Horizon Advantage & Illiquidity Premium: Public markets are built around quarterly marks and short-term sentiment. Private credit, by contrast, allows investors to take a long-term view. Investors can lean into complexity with the patience required to unlock value. When aligned with the proper underwriting and timeline, the illiquidity premium becomes a powerful driver of long-term returns.
Filling the Gaps Left by Banks: Over the last 15 years, credit market structure has changed significantly. Banks, constrained by regulatory capital requirements and risk-weighting frameworks, now operate within strict “bucketing” systems for loan types. This has created gaps in middle-market and bespoke lending that private credit is uniquely positioned to fill.
In short, private credit offers more than yield. It delivers alignment, optionality, and control in a fragmented lending environment. It is not just a substitute for public fixed income; it is a strategic building block for modern portfolio construction.
The Shift to Retail and Wealth Management
Panelists repeatedly emphasized a common theme: the walls around private credit are coming down. With institutional investors already heavily allocated to alternatives, the next frontier is retail. As John Bowman of CAIA put it, “Wealth management is the last bastion of under-allocation to alts,” but that is quickly changing.
BlackRock’s Ryan Marshall explained how acquisitions like Global Infrastructure Partners (GIP) and HPS are part of a deliberate push to bring institutional-quality private credit to wealth clients. The goal is not only broader access, but access with the scale, standards, and structure typically reserved for the largest institutional portfolios.
However, democratization comes with real complexity. Liquidity mismatch remains one of the biggest points of concern. Bowman noted that illiquidity itself is not the issue. The real risk arises when investors do not fully understand what they are buying. Private credit products must be carefully packaged and clearly communicated, especially when extended to individuals with varying liquidity needs and investment horizons. The implication is clear. Wealth managers are becoming frontline allocators. They must not only understand complex structures but also translate them into strategies that align with client goals and risk tolerance.
A word of caution: as Leslie Brun emphasized, the rise of retail alternatives has introduced more intermediaries, platforms, and fee layers. These added components risk distancing investors from the underlying asset. “Too many hands between the capital and the investment can erode transparency and returns,” he warned.
The success of private credit in the wealth channel will depend not just on product distribution, but on thoughtful product design. Investment solutions must be intentionally built for retail investors, not simply adapted from institutional formats.
Winners vs. Losers: The Great Bifurcation in Private Credit
As private credit expands, it is also stratifying. The market is no longer about who can deploy the most capital. It is about who can deploy it wisely, sustainably, and resiliently when deals go sideways. Panelists highlighted four key differentiators that will separate the winners from the rest as global volatility rises.
Restructuring Readiness: In a higher-for-longer rate environment, the assumption that “everything will refinance” no longer holds. Credit teams must include professionals with experience across multiple workout cycles. As one speaker noted, “Restructuring is re-underwriting—it demands time, energy, and a distinct skill set.” The ability to manage distressed situations in-house, with speed and sophistication, is quickly becoming essential.
Origination Edge & Credit Discipline: Katie Koch underscored the importance of proprietary deal sourcing. In an environment saturated with capital and light on diligence, unique origination capabilities allow managers to be selective. Access to differentiated deal flow at the right terms is a strategic advantage, not a luxury.
Platform Depth & Sector Insight: Phil Tseng encouraged allocators to zoom out and assess risk across sectors and capital stacks. Ryan Marshall put it simply: “Credit is a game that gets easier with scale.” Firms with broad platforms and sector-specific knowledge are better positioned to identify hidden risks and adjust to shifting market narratives.
Cash Flow Over Collateral Fantasy: Mark Attanasio’s team emphasized that asset value alone is an unreliable underwriting metric. In today’s environment, lenders must prioritize recurring, visible cash flows as the ultimate backstop. Collateral-based lending assumptions can quickly break down when asset values fall short of projections.
Firms that combine restructuring capability, origination discipline, platform breadth, and a cash-flow-first mindset are poised to lead the next phase of the market. Others may find themselves exposed as market stress tests return.
Crossing the Threshold with Clarity
Private credit’s future is no longer confined to CIO memos or institutional roundtables. It is entering client conversations, financial plans, and diversified retail portfolios. The opportunity is massive, but so is the responsibility. As AltsLA 2025 made clear, success in this next chapter will depend on scale, transparency, alignment, and long-term fundamentals.
The question is no longer whether private credit belongs in wealth management. The real question is how we bring it there: thoughtfully, sustainably, and with investor outcomes at the center.
About the Contributor
Dara Akhavein is a senior at the University of Southern California, where he is pursuing a B.A. in Economics and a Master of Science in Finance through a concurrent degree program. He is a CAIA Level II candidate and an active contributor to discussions on global macroeconomics, financial markets, and alternative investments.
Learn more about CAIA Association and how to become part of a professional network that is shaping the future of investing, by visiting https://caia.org/