HNW
Pioneer Diversified High Income Fund, Inc.
stock NYSEAMERICAN

Most HNW individuals are not DIY and the financial management industry loves complexity.

A HNW Booglehead has no need for a commercial banker. There is no reason to present their financial statements to your institution.

A few reasons:
\- It’s fun to bet on different companies and sectors (this is true for both HNW and non-HNW individuals - I’ve tried turning a ton of my friends who didn’t invest at all into Boglehead investors and I’ll invariably get texts a month or two later hearing they’ve invested in Disney or are in a data center ETF now).
\- People think they can beat the market (again true for both HNW and non-HNW individuals).
\- Tax reasons, especially tax-loss harvesting.
\- Connections. I’m a VC investor on the side, although admittedly it’s a small portion of my portfolio, and even if I lost the money I’ve invested so far, it’d be also worth the price of admission for all the interesting events, Q&As with CEOs, and connections of made with other investors I’ve met in the process.
\- Boredom. This kind of touches on the first point but VTI and chill, while probably the most effective strategy from a money-making perspective, is as boring as it gets and some people like the thrill of chasing gains.

Totally disagree. Most HNW people I know are underperforming after taxes and fees. The truth is most don’t know better, and are wined and dined and made to feel special and told that “the game changes once you have already accumulated.” Totally false. There’s no magic better strategy and there are definitely no secret ones.

I agree, I think a lot of HNW people think that broad index ETFs are for the plebes and that the exclusivity of private equity means that it's more valuable and desirable.

It’s crazy to me since HNW folks just need to invest simply and they can live off the gains alone. Obviously gotta keep lifestyle in check. It’s possible to blow millions in a year.

1. It really, really, really depends on the situation of the person. If someone has that level of wealth and is still working and has a steady income that is more than sufficient to cover their life expenses, then "VOO and chill" is probably fine.
2. As someone who works with HNW clients that are tech entrepreneurs, VCs, and angel investors, when you get into that level of wealth it *can* be less tax efficient to own ETFs/Mutual Funds as it makes it very difficult to take distributions from the portfolio in a tax efficient manner. If someone is planning on not taking a salary for the next 2-5 years while they work on their next project and they need the portfolio to provide them a salary then having to sell a single ETF and trigger capital gains with each sale is not efficient. On the flip side, it also makes it easier to contribute highly appreciated assets to charitable vehicles for tax efficiency.
3. Again, based on my experience, people have different goals/objectives with their money. Not everyone feels the most comfortable with 100% equity risk and wants to diversify across asset classes. As an asset allocator, the goal is always to seek low correlated assets that provide positive expected return that is sufficient for the risk level (easier said than done).
4. With regard to private funds, this can be a never ending debate but the reason *should* be that the funds provide high expected returns with low expected correlation to the rest of the portfolio. There are an endless number of managers out there who suck, but there are certainly managers out there who deliver.
TLDR; as with all things in life, this is not binary

Could be some selection bias here. HNW individuals *who come to your bank* are almost definitionally not Bogleheads. HNW Bogleheads won't hold significant assets at a commercial bank. Generally they won't be taking out loans either, and if they do, may look for lower-cost sources than a traditional bank.

I have a NW above the range you mention, and my portfolio is essentially a Boglehead portfolio. I’m not alone. This is common.
The fact is, if you’re a Boglehead, there isn’t much to talk about. So, when you hear people talking about their complex portfolios, they’re the minority. But they’re frequently trying to get some justification for the odd (expensive) choices they’ve made.
Even in r/FatFIRE, most of the advice that’s given is to KISS with a Boglehead portfolio. You’ll sometimes see people advocating for complex things, but those are often “wealth advisors” astroturfing for their complex (stupid) products, making it sound that’s what you do when you’re HNW.
But the fact is that most of us are Bogleheads with very simple portfolios.
You just don’t hear us talking about it because there isn’t much to talk about.

Could there be a sampling observation bias going on there there? Maybe the HNW individuals that do something like a 3-4 fund portfolio wouldn’t be customers for your bank’s financial services.

The boglehead way isn't a *quick* path to high net worth wealth, but it can get you there.
If you are reading personal financial statements, I guess these individuals are looking for something beyond basic banking, like loans etc - so your sample is perhaps biased.
I fit your definition of HNW, and I have been following a simple "VTI and chill" approach.

I think there’s some survivorship bias here.
A lot of HNW people didn’t become wealthy because complex investments are better. They often got wealthy through businesses, real estate, concentrated equity, or inheritance — then complexity showed up after the wealth already existed.
Complex doesn’t automatically mean smarter. Sometimes it just means more access, more tax planning, and more people selling them products.

It’s all about risk. Many HNW individuals took significant risk to accumulate wealth (businesses, IPOs, etc). Once they’re wealthy, they may prefer not to ride the wave up and down with a passive investment such as VTI. The goal is not about maximizing return, rather minimizing risk of losing capital.

They obtained insider information through their HNW network or through their expertise in a particular field.

VTI launched in 2001. Its popularity took longer, and the chill mantra hasn't reached everyone, let alone be absorbed by everyone.
Many people achieved HNW status despite not even knowing about VTI or even having access to it because it didn't exist in the early years of a decades old investment portfolio.

If you have enough capital you may be able to do slightly better with ‘direct indexing’ thanks to tax loss harvesting and a few other tricks. It doesn’t make sense with $100k but does with $10m. In addition, the endowment model can produce better returns over time. However, it requires significant capital and expertise to access the added diversification. And manager selection is notoriously difficult, Yale university was able to do it, but the average high net worth demonstrably is not (validating the idea that an index may outperform). I would argue at $10 million you’re not quite at the threshold but at $25 million you can start to tap into this. It’s another question as to whether or not you should.
But there’s another factor in play beyond simple accumulation. HNW and UHNW may find an alternative assets more fun. At some point if your basic needs are covered, and you have financial security, with the rest of your money, playing with things that you enjoy, may be worth the trade-off on return. I’m not saying it’s a good idea but it’s an explanation. I think of it as an expensive hobby.

It's not really about returns for most of them, even though it gets sold that way. 94% of HNW investors now hold some private or alt allocation, averaging something like 28% of the portfolio.

And the honest performance data the last couple years is not flattering. Buyout funds have underperformed public indexes recently, distributions are stuck because exits slowed hard since 2022, and a chunk of that money is just parked and illiquid right now. So it's not even beating VTI for a lot of allocators at the moment.

What it does buy is a story. Exclusivity, a relationship with a manager, something to talk about that isn't "I own the whole market in three funds." Complexity feels like sophistication even when it isn't. There's a real diversification argument buried in there somewhere, it just gets massively oversold relative to what it delivers after fees.

The answer undoubtedly depends on the HNW individual. But some want to have their wealth in 10-20 uncorrelated buckets. Or residency & passports by investment in multiple countries. Or ways to pass on wealth tax free. Or the unrivaled tax benefits of real estate. Or they believe they'll get a higher return than the broad market.

I expect that you might be seeing some of the “WII bomber damage phenomena” where bombers returning from combat have damage to wings or fuselage but not to their engines or fuel tanks.  So a naive interpretation would be that you need better protection the wings and fuselage. But the real reason that’s the result is because aircraft with damage to critical areas didn’t return and so you actually need to protect the areas that were least damaged. 
Similarly you are seeing HNW individuals seeking loans. Which is the people who need loans. Where investors with similar amounts of worth but in simple investments with well understood and reliable income streams just don’t need loans as they plan within their budgets. 

Better check your logic, because your understanding of cause and effect is way off. HNW individuals are usually just as dumb about how to invest as the average non-HNW person, maybe a little below average even.
Most of them didn't become HNW through investing in REITs and such, they inherited the money or made it through business and then didn't know what to do with it, so they hire a financial advisor/vampire who sucks away a % of their NW every year and puts them in complex investments to justify it.
Why? Because they believe that financial advisors have magic powers to deduce smart investments that normal people can't find on their own. There's a ton of research to disprove this and in fact the opposite is true, but most people think that it's real.
I know two people who inherited significant sums (in the range you're talking about) - one had a father who made money through business, the other got it when their partner passed away (who inherited it from their parents). They both were told to stick with the family financial advisor who was trusted. In both cases that "trusted advisor" created a crazy mess of investments that generated BELOW average returns - oh and they charged them a hefty % plus fees on the investments every year. Both people live fairly comfortably because they started with a big inheritance not because they generate great returns from their investments.
You're not seeing the end result of a superior investing strategy, you're seeing the end result of someone getting soaked by an advisor after the money was made elsewhere. HNW people attract leeches if they aren't careful.
Keep in mind that Bernie Madoff had seemingly smart clients like Steven Spielberg, Fred Wilpon (fomer owner of the Mets) and Jeffrey Katzenberg. They're all shrewd business people who have net worths in the hundreds of millions or more and they were thrilled to get promised returns of 10-12% per year, which isn't that much higher than the 7-8% the market has returned historically...except, of course, it was a fraud, because noone is able to generate those kind of returns consistently.