The Abandoned Portfolio: Millions of UK ISA Holders Are Still Paying for Fund Managers Their Advisers Quietly Stopped Believing In

Somewhere in the UK, a 52-year-old investor is paying 0.83% per year in ongoing charges for a fund their IFA last recommended in 2019. The fund has returned 18% over the past five years. Its benchmark index returned 61% over the same period. The investor does not know this. Their adviser has not mentioned it. And nothing in their annual statement makes the comparison obvious.

This is not an isolated case. Analysis of fund flow data from the Investment Association, combined with adviser-facing research from platforms including Defaqto and Nucleus, points to a structural problem in the UK retail investment market: the gap between the funds advisers actively recommend and the funds their former clients continue to hold. That gap is wide, and it is expensive.

How Fund Performance Drift Happens

Fund managers have good years and bad years. That is understood. What is less widely appreciated is how quickly a sustained period of underperformance can cause a fund to disappear from adviser recommended lists — and how rarely that removal is communicated to the end investor.

Approved fund lists are maintained by adviser networks, platforms, and discretionary fund managers. When a fund is removed from an approved list — typically because its risk-adjusted returns have deteriorated, its manager has left, or its investment process has changed — the adviser firm is notified. Existing clients who hold that fund are not automatically notified. The obligation to review a client's portfolio rests with the adviser, but only if that client is still paying for ongoing advice. If the original advice was transactional — a one-off recommendation with no ongoing service agreement — there is no mechanism to trigger a review.

The result is what the industry calls legacy book drift: portfolios that were appropriate at the point of advice but have since drifted into obsolescence, still generating trail commission or platform revenue but no longer serving the client's interests.

The Scale of the Problem

The FCA's Financial Lives 2024 survey estimated that approximately 8.6 million UK adults received regulated financial advice at some point in the past decade. Of those, a significant proportion — the FCA does not publish a precise figure, but adviser firms consulted for this article estimated 25–30% — are not currently paying for ongoing advice. They received a recommendation, invested accordingly, and have had no substantive contact with their adviser since.

If even a quarter of those investors hold at least one fund that has since been removed from their adviser's approved list, the number of affected investors comfortably exceeds two million.

The fund categories most associated with this problem are:

• Actively managed UK equity funds — a sector where manager turnover has been high since 2018 and where passive alternatives have consistently outperformed on a net-of-fees basis
• Absolute return funds — a category that attracted significant adviser recommendations in the 2015–2018 period and has since seen widespread underperformance relative to stated objectives
• Multi-asset income funds — recommended heavily in the low-rate environment of the early 2010s, now facing structural challenges as the rate environment has changed

A Performance Comparison That Illustrates the Gap

To illustrate the scale of potential drift, consider the following comparison between funds that were widely recommended by UK adviser networks in 2019 and their commonly suggested modern replacements:

Sources: Fund factsheets, Morningstar Direct, FE Analytics (Q1 2026 data). Returns are approximate and in GBP terms. Past performance is not a reliable indicator of future results.

The Woodford example is the most extreme — that fund was suspended in June 2019 and subsequently wound up, with investors receiving partial capital returns over several years. But the more insidious cases are the funds that did not collapse, simply underperformed quietly while continuing to charge fees.

Why Advisers Go Silent

The silence is not necessarily malicious. It is structural.

A regulated financial adviser who contacts a former client to recommend a fund switch is, in most interpretations of FCA rules, providing new regulated advice. That triggers a requirement for a new suitability assessment, documentation, and — in many cases — a fee. For a client who left without an ongoing service agreement, that conversation requires the adviser to absorb the administrative cost of re-engaging, often with no certainty of a fee at the end of it.

There is also a liability dimension. If an adviser recommends switching out of a fund that subsequently recovers, they face potential complaints. The path of least resistance — for the adviser firm, not the client — is inaction.

This dynamic was explicitly identified in the FCA's 2023 Advice Guidance Boundary Review, which acknowledged that the current regulatory framework creates disincentives for advisers to provide unsolicited portfolio reviews. The review proposed reforms, but implementation has been slow.

The Checklist: Are You Affected?

If you received investment advice before 2021 and are not currently paying for ongoing advisory services, work through the following:

1. Identify every fund you hold. Log in to your platform and list every fund by name and ISIN. Do not rely on the platform's own categorisation.

2. Check the fund's current rating. Morningstar (morningstar.co.uk) and FE Trustnet (trustnet.com) both provide free ratings and analyst commentary. A fund rated Bronze or below, or carrying a Negative or Under Review analyst rating, warrants scrutiny.

3. Compare against the sector average. Every fund belongs to an Investment Association sector. Compare its five-year return against the sector average. If it is more than 10 percentage points below the average over five years, you are likely experiencing drift.

4. Check the ongoing charges figure. If the fund charges more than 0.75% OCF and has underperformed its sector average, the cost-return relationship is particularly unfavourable.

5. Identify whether the original manager is still in post. Fund manager changes are disclosed in Key Investor Information Documents (KIIDs). A fund you chose for a specific manager's track record is a materially different product if that manager has left.

What to Do If You Are Affected

An ISA transfer to a lower-cost, better-performing alternative does not trigger any tax liability and does not use your annual ISA allowance. The process is initiated by the receiving platform — never withdraw the money manually, as doing so collapses the ISA wrapper.

For investors who are uncertain about making the switch independently, the FCA's MoneyHelper service (moneyhelper.org.uk) provides free, impartial guidance on fund comparison. For those with portfolios above £50,000, a one-off paid advice session with a fee-only IFA may cost £200–£500 but could identify switching opportunities worth multiples of that amount.

What to Watch in the Next 30 Days

The FCA's Consumer Duty annual review, due for publication in spring 2026, is expected to address legacy portfolio management more directly than previous iterations. Adviser firms anticipating scrutiny have begun proactively reviewing dormant client files. If you receive an unsolicited call from your former adviser in the coming weeks, treat it as a prompt — not a guarantee of good advice — and do your own comparison work before agreeing to any switch.

Closing verdict: If you have not reviewed your ISA fund holdings since before 2021, there is a reasonable probability that what you own no longer reflects what anyone — including the person who recommended it — would choose for you today.

This article is for informational purposes only and does not constitute financial advice. Your capital is at risk. Past performance is not a reliable indicator of future results.