What is High Net Worth in Today’s Age?

The value of money and what it can buy changes over time. In 1980, a cup of coffee cost roughly $0.50. Today, it can cost anywhere from $3 to $5. The same concept applies to net worth. In 1980, high net worth generally referred to an individual with assets of $300,000 or more. But what does high net worth mean today? HNWIs have different concerns and strategies than those outside this group. Understanding what qualifies someone as a high-net-worth individual (HNWI), the various tiers within its classification, and evolving trends in wealth management are essential for investors and financial professionals to maximize growth and preserve savings.

Defining High-Net-Worth Individuals

By today’s standards, an HNWI typically possesses at least $1 million in liquid assets (a significant change from 1980), and this excludes their primary residence. Liquid assets encompass cash or investments that can be readily converted to cash, like stocks and bonds. Further distinctions within the HNWI category include:

• Very-High-Net-Worth Individuals (VHNWIs): Those with liquid assets valued between $5 and $30 million.

• Ultra-High-Net-Worth Individuals (UHNWIs): Individuals holding more than $30 million in liquid assets.

While the average person might generally refer to anyone with more than $1 million as a millionaire, these specific classifications are widely recognized in the financial industry. They are used to tailor financial services and investment strategies to the needs of these wealthy clients.

A Growing Population of HNWIs

Today, after record highs in 2023, there are more HNWIs than ever. More than 16 million individuals worldwide met the criteria that year, with the United States in the lead. Approximately 5.5 million HNWIs reside mainly in California, Texas, New York, Florida, and Illinois. New York City, hosting 349,500 HNWIs, stands out as the wealthiest.

Evolving Wealth Management Trends

Evolving needs and expectations of HNWIs have led to changes in wealth management techniques, technology, and services. Here are some trends shaping the industry in 2025:

• Digital Transformation: HNWIs expect seamless digital experiences, especially among the tech-savvy younger generations. This includes instant access to financial details, analysis through digital platforms, smooth onboarding, and ongoing portfolio management. ​

• Personalization and Artificial Intelligence (AI) Integration: HNWIs increasingly request personalized products, and new AI technology can help financial institutions with this customization. AI integrations allow financial advisors to anticipate client needs, provide portfolio adjustments, and analyze market behavior. 

• Diversification into Private Assets: Today’s HNWIs are interested in private equity, debt and real estate investments.​ 

• Expansion of Financial Services: A desire for one-stop shopping and convenience among HNWIs and their growing numbers has led to financial institutions expanding their services. In addition to private and alternative investment options, family style offices that include estate planning attorneys and CPAs are often preferred. 

• Adoption of Whole-of-Wealth Reporting: Demand for comprehensive analysis of various data is trending across many industries, including health and finance. HNW investors are seeking an all-encompassing view of their finances, which is driving wealth management firms to invest considerably in digital advancements that facilitate whole-of-wealth reporting and detailed financial insights. ​

Challenges Facing HNWIs

As hard as it can be to accrue wealth, it can be equally difficult to hold onto it. HNWIs encounter several threats to their savings, including:

• Tax Law Changes: The current federal estate tax exemption is set to expire at the end of 2025. If it is not renewed in 2026, the rate is projected to fall to $7 million per individual from $13.6 million. This could expose more of a federal estate tax up to 40%, potentially impacting wealth across generations. This and other possible changes affecting income and capital gains tax rates are driving urgency for some HNWIs. 

• Market Volatility: Market fluctuations and economic uncertainty can erode wealth. However, a diversified investment portfolio and risk mitigation strategies can cushion the impact and sometimes result in growth in a volatile financial landscape.

• Advisor Shortage: The financial industry is experiencing a talent shortage as seasoned professionals retire and fewer young advisors enter the field. According to McKinsey & Company, a financial services practice, the industry could face a shortfall of 100,000 advisors over the next decade. Luckily, many firms are seeing the opportunity in this and modernizing recruitment and embracing new tech to meet the demands of HNWIs today.  HNWIs should seek out and establish a lasting relationship with a qualified professional to navigate the complexities of their assets across changing financial climates.

High net worth is more than just a number. It represents a dynamic and growing population with diverse financial goals and challenges. Managing significant wealth requires personalized strategies, proactive planning, and experienced financial guidance. At SHP, we understand the complexities that come with substantial assets, and our Advisory Solutions team is dedicated to providing tailored solutions that align with your objectives. Contact an SHP Financial advisor today for a complimentary portfolio review and discover how we can support your financial journey.