In theory, Europe already has a single market in financial products. European Internet customers can buy long-term investments from financial institutions outside their local areas, but few of them actually do; most people want to get face-to-face advice from experts before making a purchase. Broadband technology, which will allow that advice to be dispensed remotely across Europe, could help turn theory into practice and hugely raise the productivity of providers. But will consumers embrace on-screen financial advice?

Our research suggests that they might, especially if they already have a relationship with the provider. In September 2000, we conducted focus groups in France, Germany, Italy, the Netherlands, and the UK to gauge the reaction of customers to staged, interactive advice sessions conducted over televisions and PCs. Just over two-thirds of the participants said that they would be willing to accept interactive on-line advice in certain circumstances. Affluent people, with an acceptance rate nearing 80 percent, were the most enthusiastic (Exhibit 1). Many customers who were unwilling to use services over narrowband dial-up connections felt more comfortable with the idea of broadband services because they are easy to use, fast, and secure.

Although acceptance rates varied from country to country, the differences were smaller than expected given the huge variations in the way long-term investments are sold across Europe. Participants in all groups highlighted convenience as the most important feature of any new service. They also thought that having an adviser on hand to help make calculations and to answer questions raised by information displayed on screen would be a major improvement over current on-line offers.

Recognizing that the distinction between TVs and PCs is blurring, the willing majority was almost indifferent to which of them would be used to deliver advice. For complex personal matters, however, participants preferred the PC because of the privacy it offers and its ability to handle calculation tools easily; joint decisions and interactions requiring less privacy and attention, participants thought, could be carried out just as satisfactorily on the TV in the living room.

People unwilling to accept interactive advice tended to be older (over 60) and less financially sophisticated. They wanted their advice about personal financial services (PFS) to come from a single trusted source: their bank manager or financial adviser, whom they had known for a long time—typically more than ten years. Indeed, very few people across all of the groups (about 10 percent of the high-net-worth participants and almost none of the mass-market ones) felt that they could build a relationship purely through remote contact. Those few were younger (mid-30s to early 40s), had no current relationship with an adviser, did all their financial planning themselves, and invested in riskier products such as mutual funds and equities. The great majority of participants felt that they would need, at the very least, an initial personal meeting to establish rapport before interacting remotely.

A majority of people in all of the groups insisted that a real person would have to deliver the remote advice to win their confidence. But "avatars" (computer-generated virtual characters) would be acceptable—and, some felt, more reliable—for consumers merely seeking generic information. A majority of the people in all of the groups, especially in the Netherlands and the United Kingdom, felt concern about the security of the service and preferred that it be delivered by a well-known brand. Without a brand to give consumers confidence, they would use such a service only to gather information (to make comparisons, for instance) and would close any deal through their usual channels.

Not everyone accepted the new model for all PFS products (Exhibit 2). Simple products and investment vehicles were the most popular with all groups. Participants consistently said that they wouldn’t buy a mortgage without face-to-face human contact.

The many customers who feel that financial advice ought to be free were naturally unwilling to pay for the new service. Even those who recognized that sales commissions include payment for advice weren’t keen to pay fees for it and to get lower prices for products in return. But high-net-worth participants would be willing to pay for expert counsel from specialists or recognized industry gurus, particularly if it dealt with investment products. And these participants suggested that a high level of service could encourage them to move into riskier investments or to trade more often.