INSIGHTS

How Private Credit May Help Protect Family Wealth During Market Downturns

When stewarding wealth across generations, many families prioritize stability over short-term gains

  • Private credit may provide consistent cash flow with more stable values during market volatility
  • During the 2022 market decline, many private credit positions remained relatively flat while stocks dropped 19.4%¹
  • The illiquidity that concerns some investors may help protect family wealth during panic selling

These characteristics may make private credit valuable for families thinking in terms of generations, not quarters.

The weight you carry as your family’s financial steward can extend far beyond your own lifetime. You’re paving the way for generations you may never meet, which can feel like a big responsibility. This weight influences every investment decision, including how your portfolio responds during challenging periods.

When markets turned volatile in 2022¹, many private credit investments stayed essentially flat during that turbulent year. This wasn’t market timing or luck, it was structure working exactly as intended. Private credit doesn’t trade on public exchanges where daily emotions drive price swings. There’s generally no panic selling when headlines turn negative, no mass exodus that can destroy value during market stress.

For families managing generational wealth, this structural protection matters deeply. When you’re responsible for legacy that spans decades, you may choose to prioritize stability over pursuing every market gain. As your Forever Partners, we think for generations, not quarters. Over our years of serving families, this long-term perspective has translated into meaningful portfolio protection when it matters most.

We’ve learned that private credit’s structural advantages may create inherent stability, but realizing the full benefit requires staying aligned with your family’s investment objectives. Fund managers have flexibility to seek value across different sectors, but success often depends on their focus remaining in areas that match your risk tolerance and income needs.

Currently, some funds favor consumer lending like auto loans and credit cards over corporate lending. Others focus on real estate debt or infrastructure financing. Each approach offers different levels of risk and potential return which may respond differently to economic cycles. These distinctions matter when you’re building wealth to last generations.

These investments are priced monthly and you can access funds quarterly, which allows us to monitor performance regularly. This transparency helps maintain potential stability benefits while supporting your private credit exposure’s intended portfolio role.

Through regular communication with fund managers, we gain insight into how they see their strategies evolving. This helps us anticipate changes rather than react to properly steward your family’s wealth.

Private credit typically generates around 10% annual income², generally taxed at ordinary income rates. While this creates tax considerations, the potentially consistent income stream may align well with what multi-generational families often desire for ongoing expenses and planned distributions.

Strategic placement becomes essential in our planning process. Qualified accounts may shelter private credit income from immediate taxation, potentially allowing returns to compound for future generations. When tax-sheltered placement isn’t feasible, we coordinate across your complete family financial picture to include investments that may generate offsetting benefits.

This comprehensive tax coordination reflects our deep understanding that your wealth isn’t just numbers on statements, it may be the foundation for everything you hold dear: your family’s security, education, philanthropy, and dreams. This is why we approach every decision with the care it deserves. Families benefit from working with advisors who may serve as financial quarterbacks, helping coordinate decisions that may support generational objectives.

Over decades of serving families through multiple economic cycles, we’ve witnessed how different investments respond to market stress. In 2018, when equity markets declined approximately 6.2%³, many of the private credit positions we work with remained positive. During 2022’s challenging year with stocks falling 19.4%¹, private credit holdings often stayed relatively flat, some slightly negative, others modestly positive.

This potential stability matters most when families want predictable cash flow during uncertain times. While stock dividends may face cuts and bond values can fluctuate with interest rates, private credit has historically continued generating relatively consistent income that may allow families to maintain planned distributions and commitments.

For families managing wealth across generations, this potential stability may offer something beyond portfolio performance, a steady foundation that allows long-term family planning to continue without the emotional stress of watching portfolios fluctuate with daily headlines.

Here’s something that might surprise families new to private credit: the illiquidity that makes some investors nervous may actually help protect generational wealth during market panics.

When public markets decline sharply and fear takes over, private credit holders typically can only access funds quarterly. This structure may help prevent the mass exodus that can drive asset values down during emotional periods. There are generally no panic-driven fire sales at depressed prices.

For families thinking generationally, this structural feature may become a strategic advantage. It aligns with the long-term perspective required for building lasting family wealth and may help prevent potentially wealth-damaging decisions that sometimes occur when market fear overrides rational planning.

Every family we serve has a unique structure reflecting their values, goals, and complexity. When families have multiple entities such as foundations, trusts, and real estate holdings, private credit allocation often requires the careful coordination that comes from truly understanding your complete financial picture.

We begin with comprehensive family planning, not just investment planning, but understanding how each entity serves your family’s deeper purpose. This planning shows us your family’s income needs, return goals, and comfort with risk, which helps us determine the right private credit allocations.

We’ve learned that complexity doesn’t automatically create better outcomes. Some of our most successful multi-generational relationships involve families who thrive with simpler structures they can easily understand. Private credit has worked effectively in both complex multi-entity families and straightforward portfolio structures.

What matters is ensuring private credit allocations align with each entity’s specific role in your family’s overall wealth strategy.

Private credit may provide steady cash flow with relatively stable asset values. Rather than seeking dramatic growth from this allocation, we’re often working to build a potentially reliable income foundation that may allow families to plan confidently across generations.

Even when families don’t need immediate income, this cash flow may be reinvested strategically where it could create the most long-term value. The flexibility to direct consistent returns toward emerging opportunities or evolving family needs makes private credit valuable regardless of current income requirements.

Private credit typically offers yields that may be significantly higher than public debt securities. We monitor this potential advantage regularly because our privilege is to serve your family’s best interests, helping ensure you receive appropriate value from every investment decision.

Private credit may help provide what sophisticated families often seek: predictable income that doesn’t disappear during market stress. While other investments may fluctuate with headlines and emotions, private credit has historically continued generating cash flow that could support your family’s long-term commitments.

This potential reliability may transform how you think about portfolio construction. Rather than chasing short-term returns, you may be building the foundation that could give your family true financial confidence across decades, not quarters.

We believe that wealth is not an end in itself, but a tool to create a better life for the people you care about most today, and for generations to come. Whether that means funding educational opportunities, supporting causes you care about, or simply providing security and peace of mind, your wealth should serve your deepest values.

Our greatest satisfaction comes not from performance metrics, but from watching our client families use their financial resources to enrich their lives and the lives of their loved ones in meaningful ways. If you’re stepping into the role of managing family wealth that will impact generations to come, our Foundation Session is designed specifically for families like yours. We understand the weight you carry as a steward of your family’s financial legacy. This comprehensive meeting helps new clients understand how we serve as your Forever Partners, coordinating all aspects of your financial life, from private investments to tax planning to legacy considerations. We stand by your family’s side through life’s financial journey, quarterbacking a coordinated team of professionals to serve your evolving needs.

Learn more by visiting our website: https://everpar.com/

Sources:

¹ Yahoo Finance, “S&P 500 falls 19.4% in 2022, worst year since 2008 financial crisis,” December 30, 2022

² Goldman Sachs Asset Management, “Understanding Private Credit,” 2024

³ CNBC, “US stocks post worst year in a decade as the S&P 500 falls more than 6% in 2018,” December 31, 2018

Disclosures:

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.  All investments include a risk of loss that clients should be prepared to bear. The principal risks of EverPar’s strategies are disclosed in the publicly available Form ADV Part 2A. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. EverPar Advisors LLC (“EverPar”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where EverPar and its representatives are properly licensed or exempt from licensure.