Most UK wealth managers underperformed in 2025, yet almost all wealthy investors believe their portfolios re performing well.
New analysis from wealthtech advisory platform Y TREE shows 84% of UK wealth managers underperformed a risk-equivalent benchmark in 2025, with an average shortfall of 4.3%.
Yet separate polling of high-net-worth investors reveals 96% say they are confident they can judge whether their investments performed well, even though only 52% know how much they paid in wealth management fees last year.
By holding risk constant, Y TREE’s independent analysis of more than 550 portfolios across 110 providers isolates manager skill from market effects. The result: in 2025, most wealth managers failed to outperform a simple, lower-cost alternative taking the same risk.
The findings, published as part of Y TREE’s latest Plugged into Wealth Management report, point to an uncomfortable truth – strong markets are quietly funding wealth manager underperformance, and most investors are none the wiser.
Of those surveyed, a further 58% believe their portfolio matched the market, while over a third (36%) think they outperformed the market. Nearly all (95.6%) say that they are confident they could tell if they were paying too much.
The findings suggest that strong equity markets are masking persistent underperformance, allowing many portfolios to rise in absolute terms while still lagging a comparable benchmark. 2025 was a standout year for developed equity markets and the third consecutive year of unusually strong global equity performance, with average annual returns above 20% since 2023. Many wealth management clients saw positive absolute returns – reinforcing already high levels of confidence among wealthy UK investors.
But Y TREE research shows that over the three years since 2023, the average cumulative shortfall exceeds 15%.
Underperformance was not confined to one segment of the market. It was visible across cautious and aggressive strategies alike. Taking more risk did not materially improve the probability of outperformance. In many cases, it merely created a larger runway for implementation and concentration mistakes.
Nearly two in five (38%) investors surveyed said they judge the performance of their portfolio against a benchmark, such as the FTSE All-Share, MSCI World, or gilt yields. Yet most investors do not formally benchmark their portfolio against a risk-adjusted comparator. Instead, clients are often shown absolute returns or comparisons to broad indices, rather than a risk-matched, net-of-fees benchmark that reflects their actual portfolio exposure.
Wealth managers are not paid simply to participate in rising markets. They are paid to allocate capital skilfully, manage risk, and convert favourable market conditions into competitive, risk-adjusted outcomes, net of fees.
Stuart Cash, co-founder and CEO of Y TREE, said: “Whether you can retire at 60 or are working into your seventies depends on how well your money is managed. Our analysis shows most wealth managers are failing to beat comparable benchmarks. Yet investor confidence remains extremely high, largely because strong markets, and absolute or broad indexes are masking underperformance.
“It’s time to make wealth management work for its clients, not just its owners by bringing more transparency to the sector. Policymakers should explore introducing a standardised, risk-adjusted performance index disclosure so investors are armed with the right information to assess performance on a like-for-like basis and make decisions about who manages their money.”
