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What is a 'High Net Worth Individual - HNWI'

High net worth individual (HNWI) is a classification used by the financial services industry to denote an individual or a family with high net worth. Although there is no precise definition of how rich somebody must be to fit into this category, high net worth is generally quoted in terms of liquid assets over a certain figure. The exact amount differs by financial institution and region.

BREAKING DOWN 'High Net Worth Individual - HNWI'

The categorization is relevant because high net worth individuals generally qualify for separately managed investment accounts instead of regular mutual funds. This is where it comes into play that different financial institutions maintain different minimum standards for HNWI classification. 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.

What Makes a HNWI?

The most commonly quoted figure for membership in the high net worth club is $1 million in liquid financial assets. An investor with less than $1 million but more than $100,000 is considered to be "affluent" or perhaps even "sub-HNWI." The upper end of HNWI is around $5 million, at which point the client is then referred to as "very HNWI." More than $30 million in wealth classifies a person as "ultra HNWI."

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.

Where HNWIs Live

The Capgemini World Wealth Report reveals that as of 2015, the United States boasts the most HNWIs in the world at over 4.45 million. HNWIs represent over 1.3% of the U.S. population. Moreover, 61.2% of the global HNWI population reside in four countries: The United States, Japan, Germany and China. The two Asian countries on the list, Japan and China, had the largest increases in HNWI population between 2014 and 2015 at 11% and 16%, respectively. The biggest drop in HNWI population was suffered by Brazil, which had 8% fewer HNWIs in 2015 than in 2014.

In the United States as of 2014, 12 large metropolitan areas feature over two-thirds of the country's HNWI population with the largest portion, unsurprisingly, residing in New York City. Rounding out the top five U.S. cities for HNWIs are Los Angeles, Chicago, Washington, D.C., and San Francisco.

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