High net worth
Discussion
I've been doing some work for a firm providing investment advice for 'high net worth' individuals. I asked what the definition was and apparently they regard >£10M as HNW, >£30M is ultra high net worth.
On reflection this seems a bit odd. Someone with a massive income from a back catalogue of music or books they've written who has £10M in the bank because even with a rock and roll lifestyle they can't spend it as fast as it comes in is vastly richer than someone whose sole source of income is the £15M they got from selling their business.
What I should have asked, even though it's purely academic, is to what extent they take earnings into account. Or are they just interested in the current pot when it comes to putting someone on their books? Or do they assess back catalogue or royalty rights as part of net worth.
I get the impression a few PHers work in that world and I'd be interested to hear their views.
On reflection this seems a bit odd. Someone with a massive income from a back catalogue of music or books they've written who has £10M in the bank because even with a rock and roll lifestyle they can't spend it as fast as it comes in is vastly richer than someone whose sole source of income is the £15M they got from selling their business.
What I should have asked, even though it's purely academic, is to what extent they take earnings into account. Or are they just interested in the current pot when it comes to putting someone on their books? Or do they assess back catalogue or royalty rights as part of net worth.
I get the impression a few PHers work in that world and I'd be interested to hear their views.
In my experience the criteria used by private client firms isn't as prescriptive as a certain amount of wealth. Instead it's a combination of several factors such as:
- Liquid/investible assets
- Income and future earning potential
- Potential for future business growth eg. Family/friends/business associates etc.
- Liquid/investible assets
- Income and future earning potential
- Potential for future business growth eg. Family/friends/business associates etc.
I recall an Eddie Irvine interview where he talked about his advisor saying he was “over exposed to the luxury car market” and needed to sell some. His 288 GTO was mentioned by the advisor. Don’t know if he sold it or anything else but if he had it would have been terrible in hindsight.
trickywoo said:
I recall an Eddie Irvine interview where he talked about his advisor saying he was over exposed to the luxury car market and needed to sell some. His 288 GTO was mentioned by the advisor. Don t know if he sold it or anything else but if he had it would have been terrible in hindsight.
It sounds silly saying it but just because he had a "bad" outcome doesn't mean the advice was bad.trickywoo said:
I recall an Eddie Irvine interview where he talked about his advisor saying he was over exposed to the luxury car market and needed to sell some. His 288 GTO was mentioned by the advisor. Don t know if he sold it or anything else but if he had it would have been terrible in hindsight.
Presumably the advisor said that because it was the most expensive car in his collection - not because he was knowledgable about the car market?Austin Prefect said:
What I should have asked, even though it's purely academic, is to what extent they take earnings into account.
Saw a video on YouTube other day. A luxury car dealer was trying to get finance for a 19 year old Chelsea footballer on a £200k G63. He said to get the deal over the line the finance company needed to see a high net worth declaration. Clearly the 19 year old couldn't possibly be worth £10m - he wasn't even 1st team - so he must have qualified as high net worth on the basis of his income. Clearly there's 2 routes to HNW.
Austin Prefect said:
I've been doing some work for a firm providing investment advice for 'high net worth' individuals. I asked what the definition was and apparently they regard >£10M as HNW, >£30M is ultra high net worth.
On reflection this seems a bit odd. Someone with a massive income from a back catalogue of music or books they've written who has £10M in the bank because even with a rock and roll lifestyle they can't spend it as fast as it comes in is vastly richer than someone whose sole source of income is the £15M they got from selling their business.
What I should have asked, even though it's purely academic, is to what extent they take earnings into account. Or are they just interested in the current pot when it comes to putting someone on their books? Or do they assess back catalogue or royalty rights as part of net worth.
I get the impression a few PHers work in that world and I'd be interested to hear their views.
Their definition does not align with the FCA s definition of high net worth (which is much lower). On reflection this seems a bit odd. Someone with a massive income from a back catalogue of music or books they've written who has £10M in the bank because even with a rock and roll lifestyle they can't spend it as fast as it comes in is vastly richer than someone whose sole source of income is the £15M they got from selling their business.
What I should have asked, even though it's purely academic, is to what extent they take earnings into account. Or are they just interested in the current pot when it comes to putting someone on their books? Or do they assess back catalogue or royalty rights as part of net worth.
I get the impression a few PHers work in that world and I'd be interested to hear their views.
See: https://handbook.fca.org.uk/handbook/cobs4/cobs4s1...
Theirs will be reflective of their own approach to customer segmentation, which is fine.
Worth being aware that certification as HNWI/sophisticated investor can allow products, often more exotic ones, to be offered with reduced consumer protection.
Investment firms tend to care about investable liquidity and/or their ability to capture assets (both tied in to willingness to translate that into Assets Under Management) and, if they re doing their job properly, risk bearing capacity.
Edited by LooneyTunes on Sunday 19th April 12:32
jonsp said:
Saw a video on YouTube other day. A luxury car dealer was trying to get finance for a 19 year old Chelsea footballer on a £200k G63. He said to get the deal over the line the finance company needed to see a high net worth declaration.
Clearly the 19 year old couldn't possibly be worth £10m - he wasn't even 1st team - so he must have qualified as high net worth on the basis of his income. Clearly there's 2 routes to HNW.
The HNWI declaration referred to there will be the FCA one, to which I have linked. The threshold hasn t moved for years and is arguably a bit pointless until/unless you make that formal declaration. Clearly the 19 year old couldn't possibly be worth £10m - he wasn't even 1st team - so he must have qualified as high net worth on the basis of his income. Clearly there's 2 routes to HNW.
jonsp said:
aw a video on YouTube other day. A luxury car dealer was trying to get finance for a 19 year old Chelsea footballer on a £200k G63. He said to get the deal over the line the finance company needed to see a high net worth declaration.
Clearly the 19 year old couldn't possibly be worth £10m - he wasn't even 1st team - so he must have qualified as high net worth on the basis of his income. Clearly there's 2 routes to HNW.
That might be just a Consumer Credit thing - the usual consumer rights don’t apply to HNW individuals for loans over a certain value, so they’ll just be covering their backsides so he can’t, for example, VT the vehicle.Clearly the 19 year old couldn't possibly be worth £10m - he wasn't even 1st team - so he must have qualified as high net worth on the basis of his income. Clearly there's 2 routes to HNW.
LooneyTunes said:
Their definition does not align with the FCA s definition of high net worth (which is much lower).
See: https://handbook.fca.org.uk/handbook/cobs4/cobs4s1...
Theirs will be reflective of their own approach to customer segmentation, which is fine.
Worth being aware that certification as HNWI/sophisticated investor can allow products, often more exotic ones, to be offered with reduced consumer protection.
Investment firms tend to care about investable liquidity and/or their ability to capture assets (both tied in to willingness to translate that into Assets Under Management) and, if they re doing their job properly, risk bearing capacity.
That FCA definition is what most people would regard as borderline comfortably off, or 'mass affluent' as I think the term is.See: https://handbook.fca.org.uk/handbook/cobs4/cobs4s1...
Theirs will be reflective of their own approach to customer segmentation, which is fine.
Worth being aware that certification as HNWI/sophisticated investor can allow products, often more exotic ones, to be offered with reduced consumer protection.
Investment firms tend to care about investable liquidity and/or their ability to capture assets (both tied in to willingness to translate that into Assets Under Management) and, if they re doing their job properly, risk bearing capacity.
Edited by LooneyTunes on Sunday 19th April 12:32
Quick google apparently shows HNW individuals as having between £1m and £5m ( for UK ) in liquid assets but apparently HMRC believe £10m is usually the number - whether in liquid assets or otherwise doesn’t get a mention.
Then secondary descriptions abound with the likes of very and ultra.
Then secondary descriptions abound with the likes of very and ultra.
alscar said:
Quick google apparently shows HNW individuals as having between £1m and £5m ( for UK ) in liquid assets but apparently HMRC believe £10m is usually the number - whether in liquid assets or otherwise doesn t get a mention.
Then secondary descriptions abound with the likes of very and ultra.
£1m isn’t high net worth in the UK. £10m liquid min imo.Then secondary descriptions abound with the likes of very and ultra.
trickywoo said:
alscar said:
Quick google apparently shows HNW individuals as having between £1m and £5m ( for UK ) in liquid assets but apparently HMRC believe £10m is usually the number - whether in liquid assets or otherwise doesn t get a mention.
Then secondary descriptions abound with the likes of very and ultra.
£1m isn t high net worth in the UK. £10m liquid min imo.Then secondary descriptions abound with the likes of very and ultra.
Austin Prefect said:
The precise number varies according to who is defining it. But if the number doesn't account for earning potential it doesn't seem meaningful anyway.
I would think most WM’s would take you as a client if your “existing “ liquid assets are whatever their usual start point is. If you have just signed a billion dollar record deal I imagine they will happily make an exception.
Royalties are not guaranteed as income and can be somewhat varied in quantum and of course will dissipate over the years.
As Executor of a relatives estate whose husband was “ only “ a music arranger and composer who died over 45 years ago she was still getting payments annually of about £4k.
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