In personal finance, the term “net worth” means the financial position of an individual, and it is calculated by using the value of all of the individual’s assets, subtracting the total debt that the individual owes. For instance, if a person has got $10,000 U.S. Dollars (USD) in cash, and $2,000 USD in stock, and he owes $5,000 USD in debt on a vehicle, then that individual this means that the individual has a net worth of $7,000 USD. A person is known as a High Net Worth Individual (HNWI) when his net worth exceeds from a certain amount, usually defined at $1 million USD.

Calculation of net worth

Usually in the calculation of net worth the value or liability of a person’s primary residence is not included. However, a HNWI is defined by the U.S. Securities and Exchange Commission (SEC) by slightly different criteria for their own purposes. It is requirement of  SEC that all investment advisers who are registered with the SEC have to file reports, periodically, stating how many of their clients are HNWIs by the SEC’s definition.

HNWI defined by SEC

For the purposes of filing this form, a HNWI is someone who is having at least $750,000 USD being managed by the investment adviser filing the report. If it is reasonably believed by the advisor that the individual’s net worth exceeds $1.5 million, then this individual is also defined as a HNWI by the SEC. Unlike the criteria that is accepted in the banking and financial trade, the SEC also includes the value of a person’s primary residence in determining net worth.

Higher Classifications of Net worth

There are also other, even higher classifications of net worth.

Very High Net Worth Individual (VHNWI)

The term Very High Net Worth Individual is usually referred to as that person who is having a net worth that exceeds $5 million USD.

Ultra High Net Worth Individual (UHNWI)

Someone who is having more than $50 million USD in wealth then he would be considered an Ultra High Net Worth Individual (UHNWI).

By private wealth managers HNWIs and especially UHNWIs are in high demand. Indeed, most global banks have entirely separate teams that consists of advisers and product specialists that work exclusively for UHNWIs. This is due to the reason that the more wealth a person has, the more effort and time it takes to maintain and expand those assets. Due to their large wealth, an UHNWI is able to demand, and justify, personalized services in estate planning, tax planning, and asset management.

Retailers targeting HNWIs and UHNWIs

Apart from the financial services industry, retailers that are there in various sectors market certain brands and products by actively targeting HNWIs and UHNWIs. High-end sports cars, personal jet aircraft, and yachts are among the items that are owned by and are advertised to those people that are included in the HNWI and UHNWI categories.

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