Wealth managers will have to work harder to retain high net worth clients, who are becoming younger and less tolerant of poor service than before, according to the Merrill Lynch Capgemini World Wealth Report 2011.

The annual report – now in its fifteenth year – said advisors on average lose almost half of assets (49 per cent) during generational wealth transfers, which makes it all the more significant that the proportion of younger HNW individuals is rising. In 2010, some 17 per cent of all such individuals were 45 years old or younger, up from 13 per cent in 2008. The share of women among HNW individuals is also rising, at 27 per cent, up from 24 per cent two years before, the report said.

“While older men may be in the majority today, the HNW individual population is gradually becoming more diverse as global demographic, cultural, and business shifts challenge any broad generalisations about who HNW individuals are and how they acquire, manage and utilise their wealth,” the report said.

The age profile of HNW individuals as a share of the total varies by region, with Asia-Pacific wealthy persons being younger than elsewhere: 41 per cent of HNW individuals are 45 or younger. In the Middle East, 21 per cent are 45 or younger, and in North America, that figure is 22 per cent, perhaps reflecting an ageing population overall. In Europe, the HNW population is surprisingly young, at 45 per cent. (Parts of Europe face similar issues such as ageing populations and pension cost headaches as in the US and Japan).

“As a result, next-generation HNW clients may need a more global and holistic approach from their firms and advisors – one that includes a broad array of advice on overall finances (including taxes), investment opportunities in faster-growing international markets, and partnerships with wealth-transfer attorneys and accountants,” the report said.