Private markets and APLs: Advisers lean on AFSL for guidance

As private markets maintain their position in the spotlight amid ASIC scrutiny, an adviser and an investment specialist have highlighted the growing reliance on AFSLs to guide advisers’ use of the asset class.

In July, ASIC announced it would be increasing its surveillance of private equity and private credit funds, with a specific focus on governance, valuation practices, and the management of conflicts of interest, as part of a wider review into the private credit market. 

Then, the latest instalment of this ongoing saga saw ASIC release a thematic surveillance of private credit funds last week, with further work set to be enacted in 2026 by the regulator to tackle some of the issues identified in its report.

Given the current sentiment regarding private market assets, Centrepoint Alliance chief investment officer Daniel Stojanovski told Money Management that he thinks advisers are relying more on guidance from their AFSL when it comes to if and how they utilise private market funds.

Notably, he explained that advisers have been less inclined to ask for access to new funds or managers in the private market sector, opting to stick to the existing APL instead.

For Centrepoint in particular, Stojanovski said it typically takes a “less knives in the kitchen” approach to APL selection, particularly when it comes to private market assets.

“We do this to, obviously, protect the licensee, protect the licence, but also, inadvertently, it's to protect the adviser and their clients, and the more information adviser has, the better it is for their clients’ outcomes. That's all we're trying to do. We're not saying that there are bad or good asset classes. There are asset classes, and you're trying to assess the risk and the objective of the client, and it has to be done properly with due diligence,” he said.

Centrepoint only considers funds that have a recommended or above rating from Lonsec or are a medallist for Morningstar. Beyond this, the licensee also has an internal assessment process wherein its investment team will take a systematic approach to assessing a fund’s suitability for the APL, acting as a “second layer of defence”.

And while Centrepoint has the scale to support an internal investment team, Stojanovski noted that very few advice practices have the capacity for this, meaning they are more likely to rely solely on research house insights.

“A lot of advisers probably have been reliant more on what's on the APL, and we're reliant on not being able to see what new managers have been coming to market until they have that rating,” he said.

“My experience has been, really, even if they are in the APL, advisers have taken the approach of, how would it be used? If we're using your portfolio, how would we have a satellite approach to it? Which manager would you use? Is it complementary or not complementary?”

He added: “There's a huge amount of leaning on the team and myself around this.”

As more private credit funds continue to hit the market, Stojanovski suggested that advisers should consider what they are trying to achieve through the use of the fund and not get swept up in the hype.

“I don't have a negative view on private markets. I think they do play a part in the portfolios. However, it's about quality, and it's the managers that you partner with, and you use, and what they're trying to their objective and what they're trying to achieve within a portfolio setting,” he said.

Operating under Centrepoint’s AFSL, Freshwater Wealth founder Roger Perrett told Money Management that his firm’s ability to access the licensee’s APL means he can rely on the fact that the products available to his firm are well-researched due to its thorough assessment process.

Even so, he explained that, if he wanted access to a specific private credit fund, for example, that wasn’t available on the APL, he could ask. However, he said he typically won’t, arguing that it is likely too high-risk for his standards.

“I don't really want to have to take on the research burden, as well as the risk. So, I'm quite happy relying on, not only the research houses, but also our licensee for making those decisions,” Perrett said.

However, he also noted concerns regarding self-licensed funds as they are likely operating with a less comprehensive internal research team to assess the potential risks of private credit funds.

"There's a lot of self-licensed practices now. Are they putting people into some of these private credit funds? And maybe they shouldn't be. Maybe they don't have the level of research and rig to make sure that what their clients are in is appropriate,” Perrett added.

“Are they actually retail investments, or - because I think that's they're debating at the moment – are advisers potentially putting these clients into these investments which really aren't suitable for retail. So, I think there's question marks.”