What is an HNWI?
A high-net-worth individual (HWNI) is a financial sector classification that refers to individuals with liquid assets exceeding a particular amount. People in this group usually have $1 million in liquid assets.
It’s easy to turn cash or investments into liquid assets. That eliminates the person’s principal house and valuable items like fine art and antiques. High-net-worth individuals have at least $1 million in cash and cash-convertible assets like CDs and government bonds. Lists of liquid assets generally exclude stocks and bonds since they might lose money if sold at the wrong moment. High-net-worth individuals have stock and bond holdings, which increase their wealth. This group hires financial advisors most commonly.
Understanding High-Net-Worth Individual (HNWI) Net Wealth
Finance assesses people by their net wealth. There is no specific definition of high net worth, although it is typically characterized as possessing liquid assets worth at least $1 million. The amount varies by bank and location.
More money means more labor to manage and preserve assets. These folks typically require and can justify tailored investment, estate, and tax planning services.
Individuals with high net worth typically qualify for independently managed investment accounts, not mutual funds. Most banks require HNWIs to have a particular level of liquid assets, depository accounts, or both.
High-net-worth individuals receive more excellent perks than those under $1 million. They may qualify for discounted services, special prices, and exclusive investor events.
Wealthy individuals can invest in promising firms and participate in IPOs.
High-Net-Worth Individual (HNWI) Benefits
As a high-net-worth individual (HNWI), you may qualify for discounted banking, investing, other financial services, and exclusive events and privileges.
HNWIs can invest in hedge funds; however, accredited investors must fulfill specific criteria, such as a minimum net worth. HNWIs can invest in non-public resources like private equity (PE) and venture capital (VC) funds. They can invest in real estate and other rare items. Benefits and possibilities differ by financial institution and location.
Special Considerations
According to the Capgemini World Wealth Report, nearly 64% of HNWIs live in the US, Japan, Germany, and China. 2022 saw 7.4 million HNWIs in North America.
HNWIs worldwide reached 21.7 million in 2022, with $83 trillion in wealth. HNWI wealth was highest in North America (7.4 million), Asia-Pacific (7.1 million), Europe (5.6 million), and Latin America (600,000. The Middle East has 900,000 HNWIs, and Africa has 200,000.
Capgemini divides HNWIs into three wealth bands:
- Millionaires next door with $1 million to $5 million in investable wealth
- Mid-tier millionaires with $5–$30 million to invest
- Ultra-HNWIs with $30 million+
The global ultra-HNWI population was 210,000 in 2022. It dropped 4.6%. At 19.52 million, millionaires next door outnumbered mid-tier millionaires at 1.98 million.
Wealth Growth by Region, 2022
| 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% |
Capgemini World Wealth Report
Types of Wealthy People
Under-HNWI investors have less than $1 million but more than $100,000.Upon reaching $5 million, a customer is considered very HNWI. Ultra-HNWIs have $30 million or more.
Someone with $5 million or more is high-net-worth (VHNWI). Ultra-high-net-worth individuals (UHNWIs) have investable assets of at least $30 million.
Not included: personal assets, collectibles, and consumer durables.
High-Net-Worth Individual (HNWI) classification: how?
The most typical high-net-worth threshold is $1 million in liquid financial assets, excluding personal assets like a principal house. Sub-HNWIs have liquid assets between $1 million and $100,000 million. Very-high-net-worth individuals have $5 million in investable assets, while ultra-high-net-worth individuals have $30 million.
How do HNWIs benefit?
Wealth managers want HNWIs. Personal-managed investment accounts instead of mutual funds are usually suitable. They can get estate, tax, and portfolio management services.
Most wealthy people live where?
With 7.4 million high-net-worth individuals, North America leads Asia-Pacific with 7.1 million and Europe with 5.6 million.
The Verdict
Highly net-worth individuals (HNWIs) have $1 million in liquid assets. These wealthy people typically use financial advisors to manage their money and qualify for exclusive privileges and investing possibilities.
Because asset preservation requires more labor, private wealth managers want HNWIs. HNWIs are most prevalent in the US.
Conclusion
- A person with $1 million in liquid assets has a high net worth.
- As of 2022, North America has a record 7.4 million high-net-worth individuals.
- The ultra-rich have a net worth of $30 million. The wealth of ultra-high-net-worth people globally fell by 3.7% in 2022.
