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Q&A: "What is the Definition of a High Net Worth Individual?"

Investment Special Interest

Question: 

What is the definition of a high net worth individual? (William from Pompton Plains, NJ)

Answer: 

Hello William,

You'll find a variety of definitions and uses of the term "High Net Worth" in the financial industry. And frankly, there are advisors who misuse the term...sort of like how so many firms have "wealth management" in their name but don't actually provide genuine wealth management. 

I hate "categorizing" people but here's one set of definitions:

  • Mass Affluent -- $100,000 to $1 million (of investable assets)
  • High Net Worth -- $1 million to $5 million
  • Very High Net Worth -- $5 million to $50 million
  • Ultra High Net Worth -- over $50 million

Most such definitions focus on investable assets. However, someone who has little in investable assets but owns a business or multiple income properties worth $3 million, for example, actually has high net worth under the term's original (accounting) definition.

Regulators currently define high net worth as $1 milliion in investable assets or $2 million in net worth excluding your primary residence.