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

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

A high-net-worth individual (HNWI) is someone who generally has liquid assets of at least $1 million after accounting for their liabilities. (Liquid assets held by HNWIs include cash and investments that can be easily liquidated or converted to cash, including stocks.) The term HNWI is commonly used within the financial industry to identify individuals who need tailored financial and money management services due to their net worth.

Understanding High-Net-Worth Individuals (HNWIs)

There are several ways to reach a high net worth. Working, saving money, and making smart investments can 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, and 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.

Where Are Most High-Net-Worth Individuals (HNWIs)?

North America had about 7.9 million HNWIs in 2023, according to the Capgemini World Wealth Report. This is the highest concentration of HNWis in the world, followed by the Asia-Pacific region, with 7.4 million individuals. HNWIs in Europe totaled 5.8 million in 2023. Latin America with 600,000. The Middle East had 900,000 HNWIs while Africa had 200,000.Collectively, the total number of HNWIs around the world increased by 5.1% from 2022 to 2023, with North America experiencing the largest increase of 7.1%. The HNWI population reached 22.8 million in 2023, with a total of $86.8 trillion in wealth.

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, who have more than $30 million

Globally, the ultra-HNWI population numbered 220,000 in 2023. That's an increase of 5.0%. Mid-tier millionaires numbered 2.08 million, while the millionaires next door category made up the largest group, at 20.53 million.

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.

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

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. Ultra-high-net-worth individuals (UHNWIs) are defined as people with investable assets of at least $30 million. (This excludes property such as collectibles and consumer durables.)

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.