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| High Net Worth Individual |
A high net worth individual (HNWI) is generally defined as a person with financial assets greater than USD 1 million. Within the past few decades, this level of wealth has become increasingly common due to inflationary and wealth effects as well as the depreciation of the U.S. dollar against numerous foreign currencies. The net worth is the sum of all financial assets minus liabilities.
The assets exclude the real estate used for primary residences, which accounts for the greatest portions of wealth among U.S. households, and fixed assets such as the car and furniture. In 2005, there were 8.7 million HNWIs globally.
A further category used is ultrahigh net worth individuals (UHNWIs), comprised of individuals with financial assets greater than USD 30 million and making up approximately 0.9% of all HNWIs. There are approximately 70,000 UHNWIs in the global population with 54,000 or 77% residing in the United States and Europe.
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The third category of extreme wealth constitutes the category “billionaires.” According to Forbes’ 2007 annual list of the wealthiest individuals there are 946 U.S.-dollar billionaires in the world. Merrill Lynch and CapGemini publish annually the “World Wealth Report” that portrays the HNWIs market in detail.
To derive the numbers of HNWIs, the authors use macroeconomic analysis, in which they estimate the total wealth of a single country and determine its distribution among the population.
From this sample they derive the number of HNWIs in each country. There are businesses that focus exclusively on HNWIs or UHNWIs and their explicit needs. These include, for example, family office services, jewelry brokers, kidnap and ransom insurance, personal health manager, and yachting.
