With growing complexity and wider dispersion of returns, wealth professionals need to sharpen their approach to private market manager selection, governance, and transparency.

Not only this, the increasing popularity of rapid capital inflows, in areas such as private credit, are putting increasing pressure on private market managers to deploy capital.

Also, borrowers tend to be small and medium-sized companies with generally higher levels of debt, which can impact their ability to deal with economic instability, such as inflation and economic downturns or higher interest rates.

“There are emerging signs of weaker underwriting standards and looser loan covenants,” Nathan Lim chief investment Strategist at Evidentia Group says.

Given the critical importance of manager selection, and the relative dearth of available data, private markets call for exemplary due diligence processes, as well as a strong understanding of what this diligence aims to identify.

3. Transparency and discipline

Transparency is a non-negotiable for high-conviction allocations in private markets.

Ashmi notes that the shiny pitch decks only tell half the story.

“You can't just Google them and get the scoop because it’s private. Our job is to have strong networks. If we don’t know something, we know someone who does.”

She also looks for discipline: managers who stay within their lane and don’t chase growth at the expense of strategy.

Hagai agrees, noting that at Koda, “it’s my job to see what’s under the hood.”

Their due diligence involves site visits, full book reviews, and direct scrutiny of pipeline deals.

4. Selection, performance and valuation

Understanding how a manager screens and filters deals can reveal a lot. It’s here that Charlie’s diving scores come in.

“If a manager boasts a 26% IRR because they made a 7x return on Canva, we remove Canva from the equation. We want to know how the other 14 positions performed,” he says.

He adds that they need to see the filtering process as well.

“Every manager will tell you they see 4,000 deals a year and invest in four,” Charlie says. “But we want to know what the red flags are. What disqualifies a deal? At what point does it get serious consideration?”

Ashmi says headline performance is just the start.

“What was the entry price? What was the leverage? Is it repeatable? How was risk managed? These are the questions that really tell you what kind of return you’re likely to get going forward,” she says.

5. Fee disclosure

Layered fee structures can quietly erode expected premiums, so Vincent O’Neil, CEO at Stanford Brown says wealth professionals must understand the full picture especially when funds include sub-managers or wrappers.

“Without that transparency, the allocation may look good on paper but underdeliver in net terms,” he says.

Internal capability vs partners

As they refine due diligence processes, firms should think carefully about whether they have or can build the capacity in-house.

Not all firms can or should build this internally. Nathan from Evidentia Group says advice businesses don’t need to be investment experts. “That’s where specialist partners come in, not just for manager selection but also for ongoing oversight.”

He advises firms to be clear on their strategy and honest about their internal capabilities. “From there, you can build a framework for evaluating, monitoring and, investing in private markets.”

Heath Ueckermann, partner at Lipman Burgon says their most important investment was creating an in-house research team. “Before that, we were doing due diligence while also servicing clients and running the business. Now, our investment team is front and centre; meeting with managers, screening opportunities, and conducting full assessments.”

Charlie says their firm uses a self-assessment tool across segments to focus on “the few key things that really matter when allocating capital.”

As private markets become a larger part of client portfolios, due diligence must be a disciplined, ongoing process, backed by the right people, access to networks, and a clear-eyed view of both risk and reward. Whether advice businesses build that capability in-house or partner with specialists, their ability to evaluate managers, assess governance, and push for transparency will be critical to long-term success in an increasingly competitive space.