Personal finance

Individuals with High Net Worth (HNWI): Definition and Examples

What Exactly Is a High-Net-Worth Person (HNWI)?

A person with liquid assets above a specific amount is referred to as a high-net-worth individual (HWNI) in the financial sector. People who fit into this category typically have liquid financial assets worth at least $1 million.

These persons’ assets must be easily liquidatable and cannot contain real estate or fine art. HNWIs frequently turn to financial experts for help managing their finances. These people frequently qualify for additional perks and opportunities due to their high net worth.

A person with at least $1 million in liquid financial assets is considered high net worth.
Private wealth managers are very interested in HNWIs because it requires more effort to keep and maintain such assets.
These people are also entitled to more generous and improved benefits.
With more than 7.4 million HNWIs, the United States had the highest concentration in the world in 2021.
An individual is considered to have extremely high net worth if their assets total at least $5 million, while they are considered very high net worth if their assets total at least $30 million.


High-Net-Worth Individuals’ Net Worth (HNWIs)

In the financial sector, a person’s net worth is used to measure them. High net worth is typically defined as possessing liquid assets of a certain amount, while there is no exact definition of how affluent someone must be to fall into this category.

The precise value varies depending on the financial institution and the area, but it often applies to persons with a net worth of at least seven figures. People that fit into this category, as mentioned above, have liquid assets worth more than $1 million, including cash and cash equivalents. Personal assets and property, such as principal residences, collectibles, and consumer durables, are not included in these assets.

Private wealth managers are in great demand for HNWIs. The more wealth someone has, the more effort it takes to keep and sustain that wealth. These people typically seek individualized assistance in financial management, estate planning, tax planning, and other areas—services they can justify.

As a result, those who are classified as high-net-worth individuals typically have access to separately managed investment accounts rather than standard mutual funds. This is where it becomes important that different financial institutions have varied criteria for classifying HNWIs. For a customer to be eligible for special HNWI treatment, most banks demand that they have a particular quantity of liquid assets and/or a certain amount of depository accounts with them.

Additionally, HNWIs receive higher advantages than people with net worths under $1 million. They might be eligible for

  • Services with discounted prices
  • Discounts and exclusive prices
  • Getting into special events

High-net-worth individuals can participate in initial public offerings (IPOs) and make investments in businesses that have the potential to be profitable thanks to their money.

Particular Considerations

The United States, Japan, Germany, and China are home to about 63% of the world’s HNWIs, according to the Capgemini World Wealth Report. In 2021, there were 7.5 million HNWIs in the U.S., a 13.5% increase from the previous year.

The combined assets of the HNWI population increased by 8.0% in 2021, totaling $86 trillion in wealth. With $27.7 trillion, North America has the most HNWI wealth in the world, followed by Asia with $25.3 trillion. HNWI wealth was $18.8 trillion in Europe, $9.0 trillion in Latin America, $3.4 trillion in the Middle East, and $1.8 trillion in Africa.

The HNWI population is divided into three wealth tiers by Capgemini:

  • The $1 million to $5 million in investable wealth of the millionaires next door
  • Ultra-HNWIs, which include individuals with more than $30 million, are middle-class millionaires with incomes between $5 million and $30 million.

The number of ultra-HNWIs worldwide in 2021 was 200,100. 2.05 million of the millionaires in the middle fell into this category, with 20.1 million belonging to the millionaires just around the corner.

Top 10 Countries for High Net Worth Individuals, 2021
CountryHNWI population YoY growth
United States7,460,00013.5%

High-Net-Worth Individuals: Types

A sub-HNWI investor is one who has more than $100,000 but less than $1 million in assets. Around $5 million marks the highest limit of HNWI, at which time the client is referred to as a very-HNWI. An ultra-HNWI is someone with wealth of at least $30 million.

A person with a net worth of at least $5 million is considered to be a very-high-net-worth individual (VHNWI). People having investable assets of at least $30 million are considered ultra-high net worth individuals (UHNWIs). Of course, personal property, collectibles, and durable goods are not included in this.

How Are HNWIs Divided Up?

A high-net-worth individual is typically defined as having at least $1 million in liquid financial assets, excluding personal assets like a principal dwelling. Sub-HNWI investors are those with assets worth less than $1 million yet $100,000 or more in liquid assets. Individuals with a very high net worth are worth at least $5 million, while those with an ultra high net worth are worth at least $30 million.

What Perks Do HNWIs Receive?

Instead of standard mutual funds, HNWIs typically qualify for independently managed investment accounts. Private wealth managers are also quite interested in obtaining them. These people typically need specialized assistance in areas like estate planning, tax preparation, and financial management.

Which nations have the highest net worth citizens?

The United States, Japan, Germany, and China are the nations having the most HNWIs, respectively. About 64% of the HNWI population worldwide resides in these nations. About 7.46 million HNWIs lived in the United States in 2021, compared to 3.65 million in Japan, 1.63 million in Germany, and 1.54 million in China.

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