What is a high-net-worth individual (HNWI)?

A high-net-worth individual, or HNWI, might be defined differently among certain financial institutions. But in all cases, a high-net-worth individual is someone with a large amount of wealth.

Typically, a high-net-worth individual has assets of between $1 million and $5 million. Those with multi-million dollar fortunes, generally assets of at least $30 million, are sometimes identified as ultra-HNWI (UHNWI). The term “net worth” factors in liquid or investable assets.

High-net-worth individuals often bank at a private bank or with a wealth management firm.

At both types of institutions, high-net-worth individuals may be offered additional services beyond banking and investing. These can include trust services and estate planning, often using a team approach.

How net worth is calculated

A person’s net worth is determined by adding the person’s assets and subtracting any liabilities.

Rick Zimmerman, former senior vice president of private banking and commercial lending at Capitol Bank in Madison, Wisconsin, now retired, notes that assets include:

• Deposits in checking accounts, savings accounts and money market accounts
• Real estate you own (primary residence or an investment property)
• Retirement accounts
• Businesses you own

Regarding real estate, the mortgage balance subtracted from the value of your home counts toward your net worth.

“In the investment world [a high-net-worth individual] generally refers to liquid assets,” says Pamela Chen, CPA, CFA, chief investment officer at Refresh Investments LLC in Santa Monica, California. “So it would be investment accounts and banking accounts.”

What are the benefits of being a high-net worth individual?

As a high-net-worth individual you might be able to get higher annual percentage yields (APYs) on your savings account. You’ll likely qualify for lower rates on loans and might have access to unique products or services. You might also have a representative and team that works with you.

HNWI key statistics

The 14th Global Wealth Report from UBS projects that global wealth will increase by more than a third (38 percent) in the next four years. (The report defines ultra-high-net-worth individuals as those with $50 million or more in liquid assets.)

Insights from this report include:

• Global wealth declined in 2022. It’s the first reduction in global wealth since 2008.
• The report projects there will be 86 million millionaires and 372,000 UHNWIs by 2027.

How do you become a high-net-worth individual?

Becoming a high-net-worth individual could take many years. In most cases, hard work, saving and investing play a significant role.

Or under the right circumstances, such as these, it could almost happen overnight.

• Inheritance
• Winning the lottery or other prize
• Life insurance
• Winning a lawsuit
• Getting married
• Selling a business
• Capital gain
• Earning a very high salary or bonus

While most people likely won’t be considered high-net-worth individuals, just about anyone can use smart budgeting and saving strategies to improve their financial status over time.

Bottom Line

In today’s society, high-net-worth individuals are generally defined as those with a net worth of between $1 million and $5 million, and often have access to financial services beyond traditional banking and investing services at commercial banks and credit unions. In most cases, becoming a high-net-worth individual takes hard work, saving and smart financial management, but with determination and the right circumstances, it’s possible. While not everyone may reach this status, anyone can improve their financial standing through various budgeting and saving strategies.