What Defines High Net Worth Individuals?

Despite the economic downturn that has affected much of the developed world, some individuals have retained or even gained economic prosperity. In some markets, the number of wealthy citizens has even increased; India, for example, has seen arise in the number of its citizens that are characterized as high net worth individuals. By far, the largest number of high net worth individuals is found in the United States, and they may not be the people you think.


What classifies a person as a high net worth individual can vary depending on who you ask. The U.S. Securities and Exchange Commission describes a high net worth individual as someone with at least $750,000 managed by an investment advisor, or someone who an investment advisor reasonably believes has a net worth exceeding $1,500,000. The Merrill Lynch-Capgemini World Wealth Report of 2009 describes high net worth individuals (HWNIs) as those with at least $1 million in financial assets; the report defines Ultra HNWIs as people who hold at least $30 million in financial assets. The definition of these financial assets includes all investable assets, not including the primary residence.


Wealthy individuals may differ, but the vast majority of HNWIs share a few common characteristics. Few people become wealthy by living like celebrities; most of America's rich live well below their means in an effort to accumulate wealth. They are likely to have a strong work ethic and value financial independence, and they instill those values into their children so that their children gain economic self-sufficiency as soon as possible. High net worth individuals do have a keen business sense, a gift for finding good opportunities, and a strong understanding of their own strengths and weaknesses.

Business Ownership

One common characteristic of HNWIs is that they almost always own their own businesses. They frequently finance these companies exceptionally well, and successful business franchises can vary from the expected to the unexpected. For example, business that sells widgets can be just as lucrative as a law office or a medical practice. Within the scope of their business, they do not hesitate to employ or contract with experts; they accept their own limitations and seek out advisors and employees who can compensate for their weaknesses.

Investment Patterns

Because high net worth individuals are capable of understanding their limitations, they frequently rely on investment or financial advisors to manage their wealth. Management of such large amounts can be challenging, and most HNWIs are not experts in the financial arena. Because they acknowledge the limitations of their expertise, they generally seek out a financial advisor with the experience and knowledge they lack.

The Magic Wealth-Building Solution

There is no magic investment or risk-free path to becoming one of the super-wealthy. High net worth individuals gain wealth by building a business in a field they genuinely enjoy, working hard, keeping their eyes open for lucrative opportunities, and surrounding themselves with wise advisors. Their money is earned through concentrated, persistent, and patient effort, and through making wise choices and steady progress toward financial freedom.

Anybody can become wealthy, provided they have a strong work ethic, courage to start their own business, a modest intelligence, and the ability to accurately discern their own strengths and weaknesses. In any market or economy, hard work can pay off.