The plain definition
The usual definition of high networth individuals is a person with at least about $1 million in investable assets, not counting their main home. That is the threshold widely used in industry reports such as Capgemini’s World Wealth Report, though banks and regulators sometimes set their own levels.
Why the phrase exists
Wealth managers, private banks and regulators needed a shorthand for clients who need different services from the average saver. A person with a million in investments has more complicated tax, estate and risk questions than someone with a few thousand in a savings account. The label HNWI (and its cousin UHNWI) is the result.
The tiers you will see
Different firms draw different lines, but a common ladder looks like this.
- Mass affluent. Often described as having roughly $100,000 to $1 million in investable assets.
- High net worth. About $1 million to under $5 million in investable assets in some classifications.
- Very high net worth. Often $5 million to under $30 million.
- Ultra high net worth. Typically $30 million or more.
Treat these ranges as typical conventions, not laws. A private bank may use a lower minimum for its own services, and a different report may use different breakpoints.
What counts and what does not
This is where people get confused. “Investable assets” usually means money you can put to work or sell.
1. Cash and bank deposits.
2. Stocks, bonds and funds.
3. Retirement accounts, in many definitions.
4. Other liquid investments.
Commonly excluded are your primary residence, personal collectibles, consumer durables and, in many definitions, the value of a private business you run. Some wealth surveys do count them, which is why the same person can be HNWI in one report and not in another.
Net worth versus investable assets
Net worth subtracts debts from everything you own, including the house. Investable assets look only at financial holdings. Someone with a house worth a million and little else may have a respectable net worth but would not meet the definition of high networth individuals under the industry’s usual investable-assets test. On the other hand, a retiree with $1.2 million in a portfolio meets it even if the home is modest.
Official uses of the term
Regulators have their own thresholds that serve a different purpose. In the United States, for instance, “accredited investor” rules set income and net worth tests for who may take part in certain private investments. These rules are about investor protection, not marketing, and they are not the same as an HNWI label. You can read the regulator’s explanations on the SEC’s website to see how the tests are worded and updated.
Why the label matters to you
- Services. Private banking, dedicated advisers and tailored lending are often offered to clients above a minimum.
- Product access. Certain investments are restricted to qualified or accredited investors.
- Tax planning. Complexity rises with wealth, which tends to mean more specialist advice is worth considering.
- Marketing. Some products are aimed at HNWIs because fees on large balances are attractive.
Common misunderstandings
“A millionaire is a HNWI.”
Not always. A million in home equity does not count in most definitions.
“It is a fixed legal category.”
It is not. Outside particular regulations, it is an industry convention.
“Being HNWI means being very rich.”
In many countries a million in investments is comfortable but not extravagant, especially after inflation and in expensive cities.
How to check where you stand
Add up your liquid and investable holdings. Leave out your main home and personal property. Compare the total with the thresholds used by the firm you are dealing with. Note that wealth from a business may be treated separately.
A practical example
Suppose a bank sets its private-client minimum at $1 million in investable assets. A person with $700,000 in a retirement account, $200,000 in a brokerage account and $150,000 in cash has about $1.05 million and qualifies, even if they also have a mortgage. Another person with $400,000 in investments and a home worth $900,000 does not, though their net worth is higher overall. Seeing the difference in numbers makes the definition easier to remember.
Short recap
The definition of high networth individuals is a convention around $1 million in investable assets, split into tiers going up to ultra high net worth at about $30 million. Always ask which definition a particular report or provider uses, because the details change the answer.
This article is general information, not financial advice.
Related reading: Jimmy O. Yang Networth: What We Know About His Earnings.
