Economic net worth

Financial assets plus human capital and other implicit assets such as pension rights, less the present value of all obligations. It is what a family's planning should protect, not the investment account alone.

Where you will meet it

Economic net worth appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Explain and propose wealth management approaches that make the most of the human and financial capital, and so the economic net worth, of families in complex circumstances
  CFA Level III · Private Wealth Pathway

  “The goal is to protect and grow total economic net worth, human plus financial capital less all obligations, while treating each member fairly.”

• Evaluate how a person's financial choices respond as their economic net worth, and its split between human and financial capital, changes through life's financial stages
  CFA Level III · Portfolio Construction

  “Financial capital is accumulated savings and investments, and economic net worth combines the two with other assets less liabilities.”

See also

Human capital · Present value

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with E · Glossary