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, with dynamic regions such as Asia very much to the fore in this regard,
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
generalizations about who HNW individuals are and how they acquire,
manage and utilize 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 aging population overall. In Europe, the
HNW population is surprisingly young, at 45 per cent. (Parts of Europe
face similar issues such as aging 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.