Adoption is wide, allocations are thin
Private markets have become a core component of advisory portfolios rather than an occasional satellite. Cerulli Associates reports that advisors have allocated approximately $2.2 trillion to less-than-fully-liquid private capital and projects an additional $2 trillion over the next five years.3
Depth is another matter, and it varies sharply by channel. Cerulli classifies 11.1% of advisors across all distribution channels as alternatives "super-users," defined as allocating 10% or more to less-than-fully-liquid alternatives. Roughly one-third of wirehouse advisors meet that threshold, compared with 14.0% of hybrid RIAs and 6.7% of independent RIAs.3
That gap is the practical context for this guide. Independent RIAs are the channel with the most client-level discretion and the least institutional infrastructure to support private markets decisions. The work falls to the advisor.
What is drawing advisors in
- Income that does not depend on duration. Private credit loans are predominantly floating-rate, so their income adjusts with short-term rates rather than betting on them. For advisors who watched bonds fail to diversify equities in 2022, that is a different kind of income.
- Contractual return. Interest is owed under a contract, not at a board's discretion. The cash flow arrives quarterly rather than at an exit.
- A borrower universe that public markets do not reach. Federal Reserve research characterizes private credit borrowers as middle-market firms with annual revenues between roughly $10 million and $1 billion.4 Most will never issue a public bond.
- Structures advisors can use. Evergreen BDCs and interval funds eliminated capital calls, lowered minimums, and replaced the K-1 with a 1099.
What changed in 2025 and 2026
The same structures that expanded access produced the asset class's first visible stress event in the wealth channel. Redemption requests at non-traded BDCs ran well above the standard 5% quarterly cap through the first half of 2026, forcing managers to prorate. Across the twelve largest non-traded BDCs, which together hold more than 80% of non-traded BDC assets, redemption requests averaged 12.1% of shares in the first quarter of 2026 (median 10.1%). Those twelve funds received a little over $15 billion in redemption requests and ultimately honored 53.4% of them.5
Regulators reviewed the same episode and reached a measured conclusion. The Federal Reserve's May 2026 Financial Stability Report found that semi-liquid private credit vehicles "faced notable increases in redemption requests, and in most cases their managers chose to cap redemptions," but judged the requests "manageable." It noted that for the ten largest perpetual BDCs, available bank credit and cash could cover at least three calendar quarters of net redemptions at the 5% level of net asset value.6
Both things are true. The structures worked as designed, and many clients were surprised by how they worked.
The education gap is the real finding
Cambridge Associates observed that the reaction to gating "appears partly driven by investor (and perhaps media) misunderstanding of the fund structure."7 That diagnosis should be taken personally by advisors. A redemption cap is disclosed in every offering document. If a client is surprised by it, the gap was in the conversation, not the prospectus.