During the past two to three years, many retail banks and other financial institutions—brokerage firms, traditional private banks, and life insurance groups—have invested in new offerings and new businesses designed to serve Europe’s affluent investors. Several launched new on-line services; others invested in new or variant brands. But increasingly sophisticated affluent customers have proved elusive, and new entrants find this potentially attractive market hard to crack. Indeed, some financial institutions appear to have abandoned hope of growing in or entering it, at least for now. Could they have done a better job—or was it the downturn in financial markets that frustrated their ambitions?

At the beginning of 2002, we surveyed 6,000 investors, in ten European countries, who were 25 to 70 years old and held investable assets worth more than €35,000 ($34,500). This survey was an update of a similar effort we undertook in 1999, in very different market conditions. The results help explain why this market has been a challenging one for both new entrants and some current players. Yet the results offer hope as well.

Two primary hurdles face any financial institution that serves (or hopes to serve) this market. The first is the fact that offers...