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High-Net-Worth Individual

A high-net-worth individual, or HNWI, is generally someone with at least $1 million in cash or assets that can easily be converted into cash. The U.S. Securities and Exchange Commission (SEC) uses slightly different requirements for its Form ADV: $750,000 in investable assets or a $1.5 million in net worth. Most financial institutions provide HNWIs with exclusive services, such as access to specialized investment accounts. Some financial advisors work solely with HNWIs, although many have no account minimums for their services. Whether or not you qualify as a high-net-worth individual, a local financial advisor can help you manage your investments.

Definition of a High-Net-Worth Individual

The “high-net-worth individual” term is primarily used by the financial services industry to designate their richest clients for exclusive services. For example, a credit card company can offer HNWIs an invitation-only card with such perks as 24-hour concierge service, unlimited spending and luxury hotel upgrades.

Financial advisors also categorize their clients as high-net-worth or not.  Advisors who are registered with the SEC must annually report how many HNWI clients they have. To do that, they define them as having $750,000 in investable assets or a $1.5 million net worth.

Of course, financial advisors also identify their HNWI clients so they can cater services to their specific needs. Indeed, some wealth management firms work exclusively with HNWIs or provide them with extra services. These firms can allocate client assets across different model portfolios, including actively managed ones not available to clients with smaller investable asset levels. HNWIs may also receive customized financial planning advice around complex topics like estate planning and charitable giving.

Still, there is no multi-industry-recognized level of wealth you have to reach to be considered an HNWI. However, the general consensus is $1 million in liquid assets. This means cash you have at hand or assets you can easily sell for cash with little or no diminishment of its value. So if you’re trying to see if you’re high-net-worth, you can usually count the following liquid assets:

  • Checking accounts
  • Savings accounts
  • Money market accounts
  • Stocks
  • Bonds, especially U.S. Treasuries
  • Mutual fund shares

Most financial institutions won’t allow you to factor in assets that are harder to liquidate. These may include real estate investments, vehicles, land and more.

Types of High-Net-Worth Individuals

High-Net-Worth Individual

While having $1 million in liquid assets would make most people happy, being an HNWI is not the pinnacle as far as the financial world is concerned. With $1 million, you’d only be high-net-worth. You’d need at least $5 million in liquid assets to be a “very-high-net-worth individual.” And to be at the top of the top, or “ultra-high-net-worth,” you would need at least $30 million in liquid assets.

The SEC also defines most HNWIs as “accredited investors.” These individuals are legally defined as investors with an annual income of at least $200,000 in each of the past two years ($300,000 for joint income), or a net worth of at least $1 million, excluding the value of their personal residence. Accredited investors have access to special securities, such as private equity and hedge funds.

High-Net-Worth Statistics

According to a recent study by Statista, North America is home to the most HNWIs in the world. In fact, the numbers grew from 5.68 million in 2018 to 6.3 million in 2019 and 6.98 million in 2020. When looking at just the U.S., the number of HNWIs has steadily risen since 2011. Back then, the number of U.S. HNWIs was 3.07 million, whereas it jumped to 5.91 million in 2019.

The Pacific-Asia region has been roughly in line with or slightly higher than North America over the last decade. Europe consistently takes the third spot, with the Middle East, Latin America and Africa coming in well below the top three.

As you might imagine, the U.S. is home to some of the most affluent individuals in the world. According to Forbes, the five wealthiest Americans by net worth as of August 2021 are Jeff Bezos ($202.3 billion), Elon Musk ($191 billion), Mark Zuckerberg ($137.8 billion), Bill Gates ($133.3 billion) and Larry Page ($124.4 billion).

Bottom Line

Holding the title of “high-net-worth individual” can have its perks, but it’s a tough financial status to reach. Again, you’ll generally need at least $1 million in liquid assets or cash to be a HNWI. However, there are tiers higher than HNWI, like ultra-high-net-worth and very-high-net-worth. If you can make it into any of these groups, you’ll unlock numerous opportunities that aren’t available to most people.

Wealth Management Tips

High-Net-Worth Individual

Photo credit: ©iStock.com/Deagreez, ©iStock.com/Amoklv, ©iStock.com/Nattakorn Maneerat

Javier Simon, CEPF® Javier Simon is a banking, investing and retirement expert for SmartAsset. The personal finance writer's work has been featured in Investopedia, PLANADVISER and iGrad. Javier is a member of the Society for Advancing Business Editing and Writing. He has a degree in journalism from SUNY Plattsburgh. Javier is passionate about helping others beyond their personal finances. He has volunteered and raised funds for charities including Fight Cancer Together, Children's Miracle Network Hospitals and the National Center for Missing and Exploited Children.
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