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What is a High Net Worth Individual?

By Brendan McGuigan
Updated May 17, 2024
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A high net worth individual (HNWI) is a person with large personal financial holdings. Traditionally, the term used was "millionaire," but in recent years, this alternative term has become the descriptor of choice. This type of person has financial assets worth more than $1 million US Dollars (USD).

High net worth is used to describe financial assets, discounting real-estate. This makes a large difference in the number of people who may be included inthis class: in 2003, there were nearly 2.2 million people in the United States who would be classified as having high net worth, while over 7.9 million people had assets including real estate worth in excess of a million dollars. In addition to the category of HNWIs, there is a second category, called ultra-high net worth individuals (UHNWIs), made up of people with financial assets in excess of $30 million USD. In the global population, this second category makes up approximately 1% of the total high net worth population.

The prestige once associated with being in this group has diminished somewhat in the past few decades, as this level of wealth becomes more and more common, particularly in the United States. Throughout the US, one may find entire neighborhoods populated solely by high net worth individuals, and in some sectors of the business world, it is not uncommon for the average employee to be propelled to this status by their yearly income. With the depreciation of the dollar against many foreign currencies, large sections of foreign populations were also raised to the status simply as a result of the relative value of their wealth.

In addition to the advancement of a large sector of people to high net worth status, a not-insubstantial number of people have reached levels of "super millionaire" or "billionaire", both of which act to leave "normal" wealthy individuals feeling as though they are in a lower class. As of 2005, there were more than 600 US-dollar billionaires in the world, with the top 34 having in excess of $10 billion USD. With wealth at these levels, entire tiers of luxury exist that are inaccessible even to those who have only a few million dollars at their disposal.

Companies exist that cater exclusively to high net worth individuals and their lifestyles. Specialists can provide everything from personal real-estate, jewelry brokers, kidnap and ransom insurance, yachting, and financial investment advice.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By anon923939 — On Jan 01, 2014

Oasis, if the fund doesn't turn a profit, the fund managers, and rest of the staff still get paid their base salary, which comes out of the Management expense ratio of the fund. It is a 1-3 percent fee of AUM that is paid regardless of the performance of the fund, and keeps the fund running.

Of course, it's tiny in comparison to a decent performance fee earned by portfolio managers in a good year. Also, not only do they not earn their bonus, but they usually have large chunks of their own money in the fund, and its common practice to contribute 50 percent or more of their performance fee back into the fund. So hedge funds are a great way to avoid any conflict of interest whatsoever. They want what you want- to make as much money as their skills allow for.

Not to mention, if they don't earn consistent profits, investors will start to redeem their money and the managers' fees will start diminishing as they're all based on a percentage of assets under management.

By anon317893 — On Feb 04, 2013

Yea, I wish I could be there. Apparently, I fall well short. I am 38 years old with a family and a net worth around $25K.

By oasis11 — On Sep 23, 2010

Latte31- I heard that a high net worth investor that invests in hedge funds is looking for a high pay off and usually these funds are not regulated and the hedge fund manager does not have to divulge their investment strategy.

However, a hedge fund manager does not earn his or her 20% fee if the fund does not earn any money. They do not receive any money if the fund does not make money, so it is in their best interest to make to build the right hedge fund.

By latte31 — On Sep 23, 2010

Greenweaver-I know some high net worth investments involve hedge funds. Hedge funds are funds that either invests in venture capital firms that are new businesses that are on the verge of becoming great companies.

They usually have products that are cutting edge that might revolutionize the business world.

Another type of company that a hedge fund invests in is the private equity. These funds are made up of well known companies that are suffering financial difficulties and are temporarily struggling.

The hedge fund manager here is looking for the company to turn around and become profitable again. In order to invest in most hedge funds an investor has to have at least one million dollars.

By GreenWeaver — On Sep 23, 2010

Crispety- I know what you mean. Bank of America has partnered with Merrill Lynch in order to provide investment services to their clientele.

They offered self directed accounts that have no minimum initial deposit, while the actively managed account requires an initial deposit of $25,000.

While these clients are not necessarily a high net worth investor, Bank of America, like other banks are trying to making banking there a one stop shopping experience where they can get all of their banking needs in one place. They also offer online investments.

By Crispety — On Sep 23, 2010

Many banks have expanded their offerings to include high net worth clients.

For example, HSBC offers an account called the Primer account. A Premier account is for individuals with an initial deposit of $100,000 or more.

Usually these clients are offered a team of high net worth advisors to advise them on mutual funds investment, business succession plans, insurance needs and overall preservation of wealth.

They use a comprehensive wealth management approach in order to help their elite clientele. They even provide assistance in obtaining a mortgage in a foreign locale. They also offer discounts on mortgages and preferred rates on CD’s.

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