Who Are High Net Worth Individuals in Japan?

Last time I wrote an article about the increase in the working poor in Japan, and the fact that the number of households with a low income has been rising. At the same time, the number of households with high net worth has also been increasing. Merrill Lynch estimates the number of high net worth individuals stood at about 1,48 million people in 2006: a 5.1% increase from the previous year (Source: 2007, Merrill Lynch, World Wealth Report).

So, who are ‘fuyuu sou’ (high net worth individuals) in Japan? How can they be characterized? Are they special people? Do they really look rich?

Definition of HNW Individuals in Japan

In general, high net worth (HNW) individuals in Japan can be defined as Japanese residents with 100 million yen or more. Nomura Research Institute defines a high net worth individual as a person with net worth between 100 million and 5 million yen, and a super high net individual as a person with net worth 5 million yen or over (Source: 2005, NRI, News release). Likewise, YUCASEE, a Japanese private club for high net worth individuals sets the eligibility for membership as individuals with 100 million yen or more.

 

Key Findings about HNW Individuals

1. Various HNW individuals

Although HNW individuals can be described as a segment in Japan, the HNW segment cannot be described by common characteristics and attitudes. Professionals such as lawyers and doctors who earn high annual incomes can be HNW individuals. Baby boomers who have just received a large retirement pension can also be HNW individuals, although they do not have large annual income.

2. Financially literate

High net worth individuals are usually financially literate. In a 2006 public opinion survey on household financial assets and liabilities, individuals with a high income are more aware of financial information, such as the deposit insurance system (Source: 2006, The Central Council for Financial Services Information). Similarly, a 2006 questionnaire about mutual funds, undertaken by the Investment Trusts Association, indicates that individuals with a high income are aware of, and interested in a wide range of financial products, such as stocks and mutual funds.

3. Ordinary appearance

Not all HNW individuals look ‘rich’. When I attended an interview for research into HNW individuals, a couple of gentlemen showed up wearing shabby clothes and a holding used paper bags in their hands. I could not tell whether they were HNW individuals or not until their identities were confirmed. However, this may be obvious because the less you use your money, the more you can save.

These findings suggest that there are many things companies can learn about HNW individuals when trying to sell them products and services. Although they have the common characteristic of possessing high net worth, their lifestyles, attitudes and needs can be very different. Furthermore, HNW individuals seem to be wise enough not to waste money on unworthy products or services.

March 07 2008 10:03 am | Economy and Weekly Articles

One Response to “Who Are High Net Worth Individuals in Japan?”

  1. Roobredyday on 12 Dec 2009 at 5:43 AM #

    OMG loved reading this post. I submitted your feed to my reader!

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