April 14, 2024

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High-Net-Worth Individual (HNWI): Criteria and Example

What Is a High-Net-Worth Individual (HNWI)?

A high-net-worth individual (HWNI) is an individual who generally has liquid assets of at least $1 million after accounting for their liabilities. The term HNWI is commonly used within the financial industry to identify individuals who need tailored financial and money management services. Liquid assets held by HNWIs include cash and investments that can be easily liquidated. Individuals who fall into this category often have additional investments that contribute to their wealth, including stocks and bonds.

Key Takeaways

  • A high-net-worth individual is a person with at least $1 million in liquid financial assets.
  • North America had a record number of high-net-worth individuals at 7.4 million people as of 2022.
  • An ultra-high-net-worth individual has a net worth of more than $30 million. In 2022, the wealth of ultra-high-net-worth individuals worldwide decreased by about -3.7%.

Investopedia / Mira Norian


Understanding High-Net-Worth Individuals (HNWIs)

The financial industry measures people by their net worth. Although there is no precise definition of how wealthy someone must be to fit into this category, high net worth is generally considered to include liquid assets of $1 million. A liquid asset is cash or money in investments that can be converted to cash relatively easily at any time.

There are several ways that individuals can reach a high net worth. Working, saving money, and making smart investments can often lead to an increase in your net worth. Other ways include inheriting a large sum, winning the lottery, selling a valuable asset and/or business, or getting a settlement or a life insurance policy.

HNWIs usually get more benefits than those whose net worth falls under $1 million. Most banks require that a customer have a certain amount of liquid assets, a certain amount in depository accounts with the bank, or both, to qualify for special HNWI treatment. If they qualify, they may get services with reduced fees, special rates, and access to investor events that are closed to most.

The more money a person has, the more work it takes to maintain and preserve those assets. These individuals generally demand and can justify personalized investment management, estate planning, and tax planning services. They generally qualify for separately managed investment accounts rather than mutual funds.

Special Considerations

Almost 64% of the world’s HNWI population resides in the United States, Japan, Germany, and China, according to the Capgemini World Wealth Report. North America had about 7.4 million HNWIs in 2022.

The HNWI population reached 21.7 million in 2022, with a total of $83 trillion in wealth. North America led the world’s HNWI wealth with 7.4 million individuals, followed by the Asia-Pacific region with 7.1 million, Europe with 5.6 million, and Latin America with 600,000. The Middle East had 900,000 HNWIs while Africa had 200,000.

The management consulting firm Capgemini separates the HNWI population into three wealth bands:

  • Millionaires next door, who have $1 million to $5 million in investable wealth
  • Mid-tier millionaires with $5 million to $30 million to invest
  • Ultra-HNWIs, those with more than $30 million

Globally, the ultra-HNWI population numbered 210,000 in 2022. That’s a decrease of 4.6%. Mid-tier millionaires numbered 1.98 million, while the millionaires next door category made up the largest group at 19.52 million.

The exact amount that defines an HNWI can often differ by financial institution and region. It generally excludes the person’s primary residence as well as possessions like fine art and antiques that are relatively difficult to sell and volatile in value.

Benefits Afforded to High-Net-Worth Individuals (HNWIs)

As a high-net-worth individual, you may qualify for banking, investment, and other financial services with reduced fees, discounts, and special rates, along with access to special events and perks.

HNWIs can invest in hedge funds, which are generally open only to accredited investors who meet certain criteria, including a minimum net worth. HNWIs may also invest in private equity (PE) and venture capital (VC) funds, which are not available to the general public. They can invest in real estate and other alternative assets that are not often accessible to the general public.

These benefits and opportunities vary depending on the financial institution and region.

Wealth Growth by Region, 2022
Country HNWI wealth  YoY growth
North America $25,632,000 -7.4%
Asia-Pacific $24,653,000 -2.7%
Europe $18,171,000 -3.2%
Latin America $9,189,000 2.1%
Middle East $3,415,000 1.5%
Africa $1,858,000 1.6%

Types of High-Net-Worth Individuals (HNWIs)

An investor with less than $1 million but more than $100,000 is considered to be a sub-HNWI. The upper end of HNWI is around $5 million, at which point the client is referred to as a very-HNWI. More than $30 million in wealth classifies a person as an ultra-HNWI.

The very-high-net-worth individual (VHNWI) classification can refer to someone with a net worth of at least $5 million. Ultra-high-net-worth individuals (UHNWIs) are defined as people with investable assets of at least $30 million.

This, of course, excludes personal assets and property, collectibles, and consumer durables.

How Are HNWIs Categorized?

The most commonly quoted figure for qualification as a high-net-worth individual is at least $1 million in liquid financial assets, excluding personal assets such as a primary residence. Investors with less than $1 million but more than $100,000 liquid assets are considered sub-HNWIs. Very-high-net-worth individuals have investable assets of at least $5 million, while ultra-high-net-worth individuals have at least $30 million.

What Benefits Do HNWIs Get?

HNWIs are highly sought-after clients for wealth managers. They generally qualify for personalized managed investment accounts instead of regular mutual funds. They also qualify for estate planning and tax planning as well as portfolio management services.

Where Are Most of the High-Net-Worth Individuals?

In sheer numbers of high-net-worth individuals, North America leads the pack with 7.4 million, followed by the Asia-Pacific region with 7.1 million, and Europe with 5.6 million.

The Bottom Line

A high-net-worth individual (HNWI) is someone with liquid assets of at least $1 million. These individuals often seek the assistance of financial professionals to manage their money, and their high net worth qualifies them for additional benefits and investing opportunities that are closed to most.

HNWIs are in high demand by private wealth managers because it takes more work to maintain and preserve their assets. The United States boasts the most HNWIs in the world.

Correction—April 30, 2023: A previous version of this article stated that liquid assets might include a primary residence or works of art. Neither can quickly and easily be converted into cash and therefore are not liquid assets.

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