High-Net-Worth Individual (HNWI)

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

The term high-net-worth individual (HWNI) refers to a financial industry classification denoting an individual with liquid assets above a certain figure. People who fall into this category generally have at least $1 million in liquid financial assets.

The assets held by these individuals must be easily liquidated and cannot include things like property or fine art. HNWIs often seek the assistance of financial professionals in order to manage their money. Their high net worth often qualifies these individuals for additional benefits and opportunities.

Key Takeaways

  • A high-net-worth individual is somebody with at least $1 million in liquid financial assets.
  • HNWIs are in high demand by private wealth managers because it takes more work to maintain and preserve those assets.
  • These individuals also qualify for increased and better benefits.
  • The United States had the most HNWIs in the world in 2020, with more than 6.5 million people.
  • A very-high-net-worth individual has a net worth of at least $5 million while an ultra-high-net-worth individual is defined as having at least $30 million in assets.
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High Net Worth Individuals

Understanding High-Net-Worth Individuals (HNWIs)

Individuals are measured by their net worth in the financial industry. Although there is no precise definition of how wealthy someone must be to fit into this category, high net worth is generally quoted in terms of having liquid assets of a particular number.

The exact amount differs by financial institution and region but usually refers to people with a net wealth of seven figures or more. As noted above, people who fall into this category have more than $1 million in liquid assets, including cash and cash equivalents. These assets do not include things like personal assets and property such as primary residences, collectibles, and consumer durables.

HNWIs are in high demand by private wealth managers. 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 services in investment management, estate planning, tax planning, and so on.

As such, a high-net-worth individual classification generally qualifies people for separately managed investment accounts instead of regular mutual funds. This is where the fact that different financial institutions maintain varying standards for HNWI classification comes into play. Most banks require that a customer have a certain amount in liquid assets and/or a certain amount in depository accounts with the bank to qualify for special HNWI treatment.

HNWIs are also given more benefits than those whose net worth falls under $1 million. They may qualify for:

  • Services with reduced fees
  • Discounts and special rates
  • Access to special events

Their wealth allows high-net-worth individuals to take part in initial public offerings (IPOs) and invest in startups that demonstrate financial potential.

Special Considerations

Almost 63% of the world's HNWI population lives in the United States, Japan, Germany, and China, according to the Capgemini World Wealth Report. The U.S. had about 6.6 million HNWIs in 2020, up 11.3% from the year before.

As a group, the HNWI population saw its assets grow 7.6% in 2020, reaching $79.6 trillion in wealth. North America led the world's HNWI wealth with $24.3 trillion, followed by Asia with $24 trillion. HNWI wealth in Europe was at $17.5 trillion, followed by Latin America with $8.8 trillion, the Middle East with $3.2 trillion, and Africa with $1.7 trillion.

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
  • Ultra-HNWIs, which includes those with more than $30 million

Globally, the ultra-HNWI population numbered 200,900 in 2020. Mid-tier millionaires numbered 1.89 million, while the millionaires next door category made up the largest group at 18.7 million.

Top 10 Countries for High Net Worth Individuals, 2020
Country HNWI population  YoY growth
United States 6,575,000 11.3%
Japan 3,537,000 6.2%
Germany 1,535,000 6.9%
China 1,461,000 11%
France 714,000 1.7%
U.K. 573,000 -3.0%
Switzerland 459,000 4.9%
Canada 403,000 2.9%
Italy 301,000 2.1%
Netherlands 299,000 4.1%

Source: Capgemini World Wealth Report.

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 then 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 a net worth of at least $5 million, while ultra-high-net-worth individuals are worth at least $30 million.

What Benefits Do HNWIs Get?

HNWIs generally qualify for separately managed investment accounts instead of regular mutual funds. They are also in high demand by private wealth managers. These individuals generally require personalized services in investment management, estate planning, tax planning, and other areas.

Which Countries Have the Most High-Net-Worth Individuals?

The countries with the most HNWIs are the United States, Japan, Germany, then China, in that order. These countries make up approximately 63% of the world's HNWI population. In 2020, the U.S. had roughly 6.58 million HNWIs; Japan had 3.54 million; Germany, 1.53 million; and China, 1.46 million.

Article Sources

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  1. Capgemini Research Institute. "World Wealth Report 2021," Page 9. Accessed Aug. 26, 2021.

  2. Capgemini Research Institute. "World Wealth Report 2021," Page 7. Accessed Aug. 26, 2021.

  3. Capgemini Research Institute. "World Wealth Report 2021," Page 10. Accessed Aug. 26, 2021.