High net worth individual

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A high net worth individual (HNWI) is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets (financial assets not including primary residence) in excess of US$1 million.^[1][2] As explained below, the U.S. Securities and Exchange Commission has promulgated a different definition of "high net worth individual" for regulatory purposes.

World’s Wealth Report 2009

The Merrill Lynch - Capgemini World’s Wealth Report 2009^[3] defines HNWIs as those who hold at least US$1 million in financial assets and Ultra-HNWIs as those who hold at least US$30 million in financial assets, with both excluding collectibles, consumables, consumer durables and primary residences. The report states that in 2008 there were 8.6 million HNWIs worldwide, a decline of 14.9% from 2007. The total HNWI wealth worldwide totaled US$32.8 trillion, a 19.5% decrease from 2007. The Ultra-HNWIs experienced the greater loss, losing 24.6% in population size and 23.9% in accumulated wealth. The report revised its 2007 projections that HNWI financial wealth would reach US$59.1 trillion by 2012 and revised this downward to a 2013 HNWI wealth valued at $48.5 trillion advancing at an annual rate of 8.1%.

Ultra-High-Net-Worth Individuals

UHNWI refers to Ultra-High-Net-Worth Individuals, individuals or families who have at least US$30 million^[2] in investable assets. The number of ultra high net worth individuals worldwide is estimated at about 95,000.^[1] The exact dividing lines depend on how a bank wishes to segment its market; for example, the term Very High Net Worth Individuals^[4] can refer to those with assets between $5 million and $50 million, with Ultra High Net Worth Individuals only those with above $50 million.

Banking and finance

Most global banks, such as Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase and UBS, have a separate business unit with designated teams consisting of client advisors and product specialists exclusively for UHNWI. Because of their extreme high net worth and the way their assets were generated, these clients are often considered to have characteristics similar to Institutional investors.

Retail

Brands in various sectors, such as Bentley, Maybach and Rolls-Royce in motoring, actively target UHNWI and HNWI to sell their products. Figures gathered by Rolls-Royce suggest there are 80,000 people in the UHNWI category around the world.^[5] They have, on average, eight cars and three or four homes. Three-quarters own a jet aircraft and most have a yacht.

SEC regulations

The U.S. Securities and Exchange Commission requires all SEC-registered investment advisers to file periodically a report known as Form ADV.^[6] Among other things, Form ADV requires each investment adviser to state how many of his clients are "high net worth individuals." The Form ADV Glossary of Terms explains that a "high net worth individual" is an individual with at least $750,000 managed by the reporting investment adviser, or whose net worth the investment adviser reasonably believes exceeds $1,500,000 (or who is a "qualified purchaser" as defined in section 2(a)(51)(A) of the Investment Company Act of 1940). The net worth of an individual for SEC purposes may include assets held jointly with his or her spouse. Unlike the definitions used in the financial and banking trade, the SEC's definition of HNWI would include the value of a person's verifiable non-financial assets, such as a primary residence or art collection.

See also

• Millionaire
• Billionaire
• Swiss bank
• Wealth
• Global assets under management

References

External links

• Rivkin, Annabel (2006). "How I make the rich richer". The Times. http://www.timesonline.co.uk/tol/life_and_style/article667593.ece. Retrieved 2007-07-08.