Nearly 60 per cent of wealth managers have reported that their clients are increasingly worried about the risk of data breaches and cyber crime, as the asset management industry begins to adopt new technology, according to GlobalData.

However, despite growing cyber security fears amongst clients, a report compiled by the data analytics firm, based on interviews with wealth managers, found that just 43 per cent of professionals were concerned about the effect of potential data breaches on their company’s brand.

The report said the mix of accelerating technological change, regulation in the form of the OECD’s Common Reporting Standards (CRS), and a slowdown in the bull run in global markets, have meant the risks associated with these trends are perceived to have blended together when it comes to risk analysis for asset management.

However, the report stated that this merging of multiple risk factors meant the potential for commercial and reputational damage is now being “underestimated, if not outright ignored”.

It also cited the emergence of a younger generation of high net worth individuals in developing economies and the Middle East, with 62.1 per cent of wealth managers believing that digital channels will be more important to the next generation of clients.

The report found that older demographics are more prudent and less likely to be a victim of financial fraud, but their losses are likely to be higher than amongst the more digitally-savvy younger age groups.

“As providers keep chasing new money and record highs in net new money figures - partly thanks to opening up to new demographics - they will have no choice but to start thinking about countering threats related to financial markets downturns and cyber security,” the report read.

It added: “Technology is growing at a rapid pace, and the risk of cyber-attacks will only grow with it, furthermore, investors themselves are seeing data breaches regarding other aspects of their life such as social media heightening sensitivity.

"Wealth managers should have a contingency plan in place to reduce dampening profits and damage to brand image."

Sergel Woldemichael, wealth management analyst at GlobalData, said the relatively low numbers of wealth managers concerned about the effect of data breaches showed a “nonchalance” with regards to cyber security risks that “needed to change”.

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