The myths holding clients back from private markets

The institutional case for private markets allocations is well-established. For advisers working with wholesale clients, however, the conversation often stalls at a different set of questions: What exactly is my client owning? How do they get out? And how will they know what it’s worth?

Christian Ryan, executive chair of FinCap, has spent considerable time mapping those questions. His research suggests that many of the most common objections rest on misconceptions that a clearer framing can largely resolve.

Familiar assets, unfamiliar label

The first misconception is the idea that private investments are exotic or inherently opaque. He argues the mechanics are straightforward.

Investors allocate capital to an asset, project or company and receive returns through income, capital appreciation, or both.

Unlike public markets, transactions occur outside listed exchanges and go unreported publicly. That is a disclosure difference, not a complexity one.

Ryan makes the familiarity point concrete. “Your local coffee shop, your dentist, the family holiday park you return to every summer,” he says, “all these are private businesses that could, theoretically, become investments. The land these companies sit on, the real assets they hold and the income they generate are what private investors are backing.”

The market data reinforces the point. Around two-thirds of Australia’s private-sector workforce is employed by small and medium-sized private businesses.

Most people interact with this market every day. That is often more than they interact with the mega-caps listed on the stock exchange.

For clients who find the concept of private markets abstract, that reframe tends to land well.

Access and exit

Entry has become less of a practical hurdle. Private markets are now accessible through platforms, fund-of-funds structures, listed trusts and co-investments. A licensed wealth manager can guide the process from start to finish.

It is the exit question where advisers encounter the most friction, and where Ryan is most careful to separate genuine constraint from outdated assumption.

Private markets allocations are typically illiquid or semi-illiquid. Investors must hold capital over the long term before they can fully realise gains or sell an asset. That is not a flaw to be papered over. It is a structural feature that directly drives the return premium these assets have historically delivered.

The question for advisers is not how to avoid illiquidity, but how to size it appropriately within a client’s broader portfolio, against their actual investment horizon.

“The growing range of opportunities means portfolios can increasingly be tailored to individual liquidity preferences and investment horizons.”

A market that is bigger than most clients imagine

The size of the opportunity is another area where client understanding often lags the reality. EY values the Australian private credit industry at approximately $235 billion, accounting for around 12 per cent of business and corporate lending.

Globally, the McKinsey Global Institute estimates infrastructure needs around US$3.7 trillion a year in funding, a gap private capital is increasingly stepping in to fill.

Private market opportunities span everything from local community businesses to international pre-IPO companies.

For advisers, that breadth is both a challenge and an advantage. The universe is large enough that there is genuinely something for most client profiles, but curating appropriate access requires more active judgment than a listed index can provide.

The valuation lag, and a possible answer

Perhaps the most technically valid concern clients raise is valuation transparency. In public markets, a consolidated portfolio view is available in real time, driven by continuous buyer activity. In private markets, fund managers and independent third parties typically issue a Net Asset Value report quarterly, or even annually.

That creates an unavoidable lag and a degree of subjectivity that some clients find unsettling, and that advisers need a clear way to explain.

Ryan’s response is pointed. “This is a system problem, not a private market one,” he says. The distinction matters because it shifts the frame from an inherent weakness in the asset class to a solvable infrastructure challenge, and one the industry is now actively solving.

FinCap’s managed account platform is designed to address exactly that gap. The platform consolidates data from partnered fund managers and research houses, giving advisers and wholesale investors a single, near-continuous view of their private holdings.

The goal, Ryan says, is to give private markets allocations much of the visibility investors are used to in public markets.

The practical value of that visibility is hard to overstate. Explaining private markets allocations to a client is easier when the reporting is clear, current and consolidated.

The investment case for private markets has not changed. What is changing is the infrastructure around it, and the quality of the conversation that infrastructure makes possible.