In the past, being a millionaire was synonymous with being wealthy. Nowadays, the word “millionaire” seems almost outdated. The modern term for someone with significant wealth is “high-net-worth individual.”
Often abbreviated as HNWI, this term describes a person or household possessing considerable financial assets. Typically, HNWIs have assets totaling $1 million or more.
High-net-worth individuals fall into three categories
Classifications for high-net-worth individuals fall into three categories based on their liquid assets. Financial professionals use the following terminology:
- High-net-worth individuals (HNWIs): Liquid assets between $1 million and $5 million
- Very-high-net-worth individuals (VHNWIs): Liquid assets between $5 million and $30 million
- Ultra-high-net-worth individuals (UHNWIs): Liquid assets exceeding $30 million
These terms help financial advisors offer appropriate services based on the amount of wealth managed.
The U.S. has the most high-net-worth individuals
In 2019, the countries with the highest number of HNWIs included the United States, Japan, Germany, China and France. The U.S. leads the pack, with 62% of the world’s HNWIs residing in the U.S., Japan, Germany and China.
According to Spectrem Group, in 2020, 11.6 million American households had a net worth between $1 million and $5 million, an increase of 5.5% from the previous year. The number of ultra-high-net-worth individuals in the U.S. also grew by 21.3% in 2020, reaching 1.8 million households.
Benefits and challenges of extreme wealth
Having significant wealth comes with various advantages. High-net-worth individuals receive exceptional treatment from financial advisors who offer personalized services. They also gain access to exclusive investment opportunities and high-profile events.
However, wealth doesn’t guarantee happiness. For instance, HNWI marriages can face unique challenges, particularly during a divorce. A high-asset divorce attorney familiar with these complexities can help protect their interests and navigate the intricacies of wealth and separation.