Fiduciary managers (FMs) are still recovering from the financial shocks of recent years, and long-term investment performance remains underwhelming, according to a report from Barnett Waddingham.

The firm urged pension funds to review their FM’s investment performance following disappointing results, which could have a serious impact on long-term gains.

The key findings of the report showed that, while most FMs achieved their investment objectives in 2024, many have struggled to beat their objectives over the longer term, despite relatively favourable conditions in the equity markets.

Notably, the report highlighted an emerging divide between top- and bottom-performing FMs, with increasing dispersion in returns among clients within the same FM. This underscores the importance of aligning FM strategies with the specific needs and goals of individual pension schemes.

Looking forward, the report suggested that regulatory challenges and policy were the greatest preoccupations for FMs in 2025, replacing hedging and inflation risks as the top concerns.

Barnett Waddingham partner and head of outsourced investment services, Peter Daniels, said: “The findings of this year’s review provide an interesting backdrop for the many pension schemes that will be formally reviewing their FM arrangements over the coming year.”

He added: “We are approaching the five-year anniversary of tender activity instigated by the CMA review; as a result, trustee boards should be reflecting on whether their provider has delivered on its promises and whether their FM arrangements remain fit for purpose.”

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