Wealth Management Stocks Tumble as AI Tax-Planning Tool Sparks Disruption Fears Across Sector

Charles Schwab CEO Says AI Is Poised to Boost Wealth Managers

Wurster compared the current situation to the introduction of robo-advice 10 years ago, saying it was additive to the adviser community and did not displace it. Charles Schwab Corp.'s top executive said artificial intelligence is poised to aid the wealth-management sector rather than hurt it as fears around AI-driven financial advice have mounted, sending shares down this week. Schwab Chief Executive Officer Rick Wurster said he was "disappointed and surprised" by a selloff of the retail brokerage's shares Tuesday because he thinks AI has the potential to make financial advisers more efficient rather than irrelevant. "The market is missing that we are a natural winner in the AI space because of all of the advantages we have -- because of our size, our scale, our data," Wurster said Wednesday in a Bloomberg Television interview. "With the power of AI, not only are we reaching those clients we have a relationship with, we are able to help a whole new group of clients." The potential disruption AI tools could cause has sent jitters through shares in a variety of sectors, including software, private credit and insurance brokerages. Shares of wealth-management firms -- including Schwab -- sank on Tuesday following news of the introduction of an AI-driven tax-planning tool. "This is the same story from 10 years ago when robo-advice was going to displace the adviser community and pressure fees," Wurster said. "You haven't seen it displace the growth of the adviser community. In fact, it's grown, and fees have not come down and, again, that was a new technology 10 years ago. It has been additive to the adviser community." Shares of Schwab slumped 7.4% on Wednesday, and are down 0.7% since the beginning of the year. "That role of the adviser as a critical sounding board to the individual and families, we don't think that is going away," Wurster said.

UK wealth managers stocks tumble as AI fears ripple across Europe

MILAN, Feb 11 - UK wealth management stocks St James's Place and Quilter fell sharply on Wednesday, as concerns over potential disruption from artificial intelligence spread to the broader European financial sector, following a steep selloff in U.S. rival stocks. A gauge of European financial services shares (.SXFP), opens new tab fell as much as 1.8% by 0923 GMT, with St James's Place (SJP.L), opens new tab down more than 10% at one point and Quilter (QLT.L), opens new tab sliding as much as 6.1%, both hitting their lowest levels since December. Shares in LSEG (LSEG.L), opens new tab, already hit by a selloff last week that wiped out nearly $1 trillion in value from across the global software sector, rose 2% after activist investor Elliott was reported to have built a stake and begun engaging with the company to drive performance. Shares of U.S. brokerages sold off on Tuesday after wealth management startup Altruist introduced AI‑enabled tax‑planning features, as the still-nascent technology continues to fuel fears over disruption to incumbents. Analysts at RBC Capital Markets said the reaction in UK wealth manager stocks appeared driven more by short‑term positioning than any fundamental shift, noting the selloff mirrored larger declines in U.S. wealth shares. "If shares do continue to display volatility in response to subsequent developments, we expect this to reignite the man vs machine debate in delivery of financial advice/WM," they wrote in a note. Elsewhere across European financials, Italian asset managers were also heavily hit, with Banca Mediolanum (BMED.MI), opens new tab and Azimut (AZMT.MI), opens new tab down 5.6% and 3.8%, respectively. Other big decliners on Wednesday included online trading platforms FlatexDEGIRO (FTKn.DE), opens new tab and Swissquote (SQN.S), opens new tab. Reporting by Danilo Masoni; Editing by Amanda Cooper Our Standards: The Thomson Reuters Trust Principles., opens new tab

Wealth stocks dropped on fears AI is coming for them next. Morgan Stanley and others say buy the dip

The sell-off in financial services stocks on new fears over artificial intelligence has created a buying opportunity, according to Wall Street analysts. Several wealth management companies tumbled on Tuesday after tech platform Altruist announced a new AI-powered, tax planning tool on its AI platform, Hazel. LPL Financial closed more than 8% lower, Charles Schwab lost 7.4%, Raymond James Financial fell nearly 9% and Ameriprise Financial slumped about 6%. The stocks, except for Raymond James, continued to move lower on Wednesday. "[W]e think the market looked at this new AI tool and fears scope for other potential AI tools yet to come in wealth management, that could raise questions around sustainability of wealth mgmt fee streams (which have generally been quite stable) and competitive dynamics," said Morgan Stanley analyst Michael Cyprys. LPLA YTD mountain LPL Financial year to date He called the sell-off "outsized and overdone." Instead, brokers and wealth managers are well-placed to benefit from the productivity gains that could be unlocked by using AI. "This will be crucial especially as we see potential for a generational wealth transfer from baby boomer/silent generations for gen x/millennials/gen Z that will increase those who seek out advisory services via wealth mgmt," Cyprys said in a note Wednesday. "Further, we see a bull market for advice approaching given aging populations, longevity trends and increased burden on the individual to prepare and manage through an extended retirement to ensure they don't outlive their nest egg." This should further cement the role of financial advisors, he said. In fact, many brokers are already making investments in AI, he said. Altruist's offering is also available to advisory firms, he noted. Morgan Stanley prefers Schwab and LPL Financial, both of which Cyprys rates overweight. SCHW YTD mountain Charles Schwab year to date Deutsche Bank analyst Brian Bedell is similarly reinforcing his buy rating on Schwab. He called the selloff an "overreaction to market concerns about AI-driven disruption" and said AI isn't a threat, but a significant opportunity. Schwab has already been integrating AI into its business, with more than 220 AI use cases in production, he said. "Looking ahead, SCHW expects AI to accelerate growth by enhancing its best-in-class client experience and enabling personalized outreach to a wider investor base, further strengthening its leadership position in the financial services industry," Bedell wrote in a note Wednesday. For its part, TD Cowen doesn't expect Altruist's new AI tool to alter the near-term prospects for wealth managers. "We think the stocks can shrug off the risks tactically. Within our coverage, the pullbacks enhance the risk/rewards," analyst Bill Katz said in a note Tuesday. "[H]owever, most of these stocks were bucking up against our prior 12M price targets, suggesting not enough 'fear' is fully embedded to more structurally step in." He continues to favor Schwab, which he sees as a more immediate beneficiary of AI. Looking out over the next decade, the introduction of AI into wealth management feels more like an evolution than a mass disruption, said Citizens JMP analyst Devin Ryan. "Over multiple decades, it is obvious the industry will look different, and the role of the financial advisor may evolve meaningfully," he said in a note on Tuesday. "But across our coverage today, wealth management does not stand out as a business that is obviously ripe for near-term disruption." In fact, wealth management isn't like other service sectors that could be more meaningfully affected, he added. "Bottom line, the headlines may seem jarring to some (or contrived by others), but we think the underlying reality remains far more measured," Ryan wrote.

Wealth Manager Stocks Sink as New AI Tool Sparks Disruption Fear

Tax planning and wealth management stocks sank Tuesday after financial software provider Altruist Corp. launched an artificial intelligence tool for creating tax strategies, sparking concerns that traditional players could be at risk. Shares of Charles Schwab Corp. fell as much as 8.1%, with other wealth management stocks also taking a hit. Raymond James Financial Inc. dropped 8.5%, LPL Financial Holdings Inc. slid 8.4% and Stifel Financial Corp. sank 7.2%. Altruist's new tool, unveiled on Tuesday, helps financial advisors personalize strategies for clients and create pay stubs, account statements and other documents, the company said in a statement. "The selloff appears tied to broader concerns about AI disrupting the financial advice and wealth management model," said Neil Sipes, an analyst with Bloomberg Intelligence. Investor focus today is "likely centering on concerns around efficiencies being competed away, fee compression long-term and potential market share shifts." Insurance brokers' stocks had a similar meltdown Monday after Insurify's new rate-comparison AI tool raised concerns about those companies' businesses. The threat to traditional business models across industries from the advent of new AI-powered applications has started spreading into many corners of the stock market, starting with the software firms. The jitters really struck investors last week after AI startup Anthropic released tools aimed at automating work tasks across areas ranging from legal services to financial research.

US brokerages fall as AI-driven rout extends to financials

Feb 10 (Reuters) - Shares of U.S. brokerages fell on Tuesday after wealth management startup Altruist introduced AI-enabled tax planning features, as the still-nascent technology continues to fuel disruption fears for the incumbents. The selloff reflects growing investor anxiety toward legacy financial and tech firms as AI-first startups automate complex tasks that were long the exclusive domain of expensive human advisors. Charles Schwab (SCHW.N), opens new tab slipped 6.4%, LPL Financial (LPLA.O), opens new tab dived 8.3%, Raymond James Financial (RJF.N), opens new tab was down 7%, and Stifel Financial (SF.N), opens new tab fell 6.5%. Wall Street giant Morgan Stanley (MS.N), opens new tab fell 2.8%, while Ameriprise Financial (AMP.N), opens new tab slipped 6%. Financial markets, juiced for months with investor enthusiasm about the AI trade, were jolted last week as global software stocks sank on worries of disruption by vibe coding AI tools. Founded in 2018, Altruist acts as a self-clearing brokerage for investment advisers, offering a unified platform for account opening, trading, reporting and billing. Integrated into its Hazel AI platform, its latest feature automates the creation of personalized tax strategies by instantly analyzing client documents like 1040s, pay stubs and meeting notes. "Looks like it could potentially disrupt some of the retail brokerages. That's why the stocks are selling off here right now," said Dennis Dick, chief market strategist at Stock Trader Network, referring to Altruist's latest launch. Insurgent brokerages, including Robinhood and rival Public, have already been making headway into the sector via their low-cost and tech-enabled offerings. In November, Public launched an AI-powered brokerage that lets users build their own ETFs to invest in. Robinhood offers its Gold subscribers an AI-powered investing assistant that allows users to chat through trading ideas and enact orders. "When you get just one little thing, traders sell first and ask questions later. Every time we get one of these headlines, another sector bites the dust," Dick added. Reporting by Ateev Bhandari in Bengaluru, additional reporting by Purvi Agarwal; editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab

The AI threat wrecked software stocks. Now broker stocks look next with LPL down 11%

Financial stocks are the latest to fall on AI threats. Software stocks have also been hit. Shares of financial services firms tanked Tuesday after the launch of a new tax planning tool powered by artificial intelligence that promises to do the work "within minutes." LPL Financial tumbled nearly 11%, while Charles Schwab and Raymond James Financial both dropped more than 9% amid fears that AI will disrupt their industry next. Morgan Stanley dropped 4%. Tech platform Altruist announced the offering within its AI platform, Hazel, and said it "helps advisors create fully personalized tax strategies for clients by reading and interpreting their 1040s, paystubs, account statements, meeting notes, emails, and custodial and CRM data, and applying deep tax logic to the analysis."

UK wealth manager and price comparison site shares fall amid AI fears

Drop comes as AI firm Altruist launches service that helps advisers create personalised tax strategies Wealth managers and price comparison sites have become the latest companies to be hit by fears that their businesses will be disrupted by new artificial intelligence innovations. Shares in UK wealth management firms tumbled on Wednesday morning, after the AI company Altruist Corp launched a service that it said helps advisers create personalised tax strategies by reading clients' pay stubs, account statements and other documents. The UK wealth manager St James's Place fell almost 10% in early trading, with the rival Quilter down 5.2% and AJ Bell losing 5.7%, as investors anticipated that agentic tools that can sort tax affairs, or provide advice, could eat into their revenues. "Fresh casualties from AI advances are falling on the investment landscape," warned Susannah Streeter, the chief investment strategist at Wealth Club. "The big reveal from tech startup Altruist Corp, which is led by former Wall Street professionals, is a new tool helping financial advisers personalise tax strategies for clients and deal with all the admin. The worry is that this is just the tip of the iceberg and fresh efficiencies will be unleashed by AI to disrupt the financial advice and investment industry and reduce the fees which can be charged. As the AI cards are shuffled, the pile of potential losers is mounting up, and speculation about which sector will be hit next is rife," Streeter added. Shares in two of the UK's largest price comparison sites continued to slide on Wednesday, adding to losses in the previous session. The owner of Moneysupermarket, Mony Group, fell 2% in early trading on Wednesday, after they closed 12% down on Tuesday, after a sell-off pushed its shares to their lowest level in 13 years. The Go.Compare owner, Future, was trading 2.7% lower on Wednesday morning, after the previous day's 3.6% fall. Investors have become nervous about the prospect of disruption from AI and other new technologies, after the US company Insurify launched a new service allowing users to compare car insurance quotes directly using OpenAI's ChatGPT. In addition, the Spain-based digital insurer Tuio is to provide home insurance quotes directly to ChatGPT users, and other companies are expected to follow suit, adding to fears that consumers seeking car, home and travel insurance could turn to chatbots to gather and compare quotes. Mony Group owns brands including Moneysupermarket and TravelSupermarket, as well as the cashback website Quidco and MoneySavingExpert, the personal finance help site started by Martin Lewis. Future is one of the most shorted UK stocks, as investors have placed bets that its value will fall further. Insurify's founder and chief executive, Snejina Zacharia, said the company was "redefining the insurance shopping experience by making it feel as simple as having a conversation". She added: "Drivers can ask questions in plain language, explore personalised quotes, and review real customer feedback, all in one place". Insurance and wealth management are the latest sectors to suffer big share price drops this year as a result of fears about the impact of AI, after falls in publishing and legal software companies and advertising firms. "Getting an insurance quote through ChatGPT makes perfect sense as many people are now using chatbots to obtain information on products and services, said Dan Coatsworth, the head of markets at the broker AJ Bell. "The share price slump in the owners of Moneysupermarket and Go.Compare suggests ... comparison portals will have to quickly find a way to get in on the game, such as embedding their services into ChatGPT and potentially offering bigger incentives to prospective customers as well as getting their brand to appear prominently in search results." Recent declines in software companies came after the US artificial intelligence startup Anthropic, the company behind the chatbot Claude, revealed a tool for use by companies' legal departments. Anthropic said the tool could automate legal work such as contract reviewing, non-disclosure agreement triage, compliance workflows, legal briefings and templated responses. The news hit shares in the UK publishing group Pearson, the information and analytics company Relx, as well as the software company Sage.

AI fears hit wealth management and price comparison stocks

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. The sharp drop in share prices after the launch by the AI company Altruist Corp of a service that helps advisers create personalised tax strategies by reading clients' pay stubs, account statements and other documents. The UK wealth manager St James's Place fell almost 10% in early trading, with rival Quilter down 5.2% and AJ Bell losing 5.7%, as investors anticipated that agentic tools that can sort tax affairs, or provide advice, could eat into their revenues. Shares in two of the UK's largest price comparison sites continued to slide on Wednesday, adding to losses in the previous session, following the launch by Insurify of a new service allowing users to compare car insurance quotes directly using OpenAI's ChatGPT. The owner of Moneysupermarket, Mony Group, fell 2% in early trading on Wednesday, after closing 12% down on Tuesday. The Go.Compare owner, Future, was trading 2.7% lower on Wednesday morning, after the previous day's 3.6% fall. The latest share price slump follows declines in legal and data publishing firms after the US artificial intelligence startup Anthropic unveiled a tool to automate legal work such as contract reviewing, non-disclosure agreement triage, compliance workflows, legal briefings and templated responses.

US Stocks Today | AI fears hit US wealth managers: Why stocks sank and what's next

US wealth management and brokerage stocks suffered a sharp selloff after a new artificial intelligence tool reignited fears that parts of the industry's core business could face disruption from automation. Shares of major players such as Charles Schwab, Raymond James, LPL Financial, Ameriprise Financial and Stifel Financial fell between 6% and 9% in a single session, making the group one of the worst-performing pockets of the US financial sector. What triggered the selloff? The immediate catalyst was an announcement by fintech firm Altruist, which unveiled an AI-powered tax-planning feature for its Hazel platform. The tool is designed to automatically analyse client documents -- including tax returns, pay stubs and account statements -- and generate personalised tax strategies for financial advisors. While Altruist primarily serves registered investment advisors (RIAs) and is far smaller than incumbents such as Schwab or Fidelity, investors reacted to the broader implication: that artificial intelligence is beginning to automate higher-value advisory functions that were previously protected by human expertise. According to Reuters and Bloomberg, the market interpreted the announcement as a potential threat to fee-based revenue, especially in areas like tax optimisation, financial planning and client servicing -- key profit centres for wealth managers. The concern is that AI tools could compress fees, reduce the need for large advisory teams and erode the competitive moat that large firms have built around personalised service. Why was the reaction so severe The selloff also reflects broader investor anxiety about AI-driven disruption spreading across professional services. In recent days, similar fears have hit software companies and insurance brokers after other AI tools were launched to automate research, underwriting and legal tasks. Barron's noted that wealth management stocks were already trading at premium valuations due to their steady cash flows and strong client relationships. That made them vulnerable to a sudden repricing when investors began to question how defensible those earnings would be in an AI-driven future. Even the hint that technology could challenge traditional advisory models was enough to trigger aggressive profit-taking. Adding to the pressure, weak US economic data and falling Treasury yields have raised concerns about slower growth, which could also weigh on asset inflows and trading activity -- another headwind for brokerage firms. What analysts are saying Despite the sharp market reaction, many analysts argue the selloff may be an overreaction in the near term. Several point out that AI tools are more likely to complement human advisors rather than fully replace them, especially in areas involving behavioural coaching, trust-based relationships and complex financial decision-making. Reuters reported that some market participants believe established firms still have strong advantages, including deep client relationships, proprietary data, regulatory infrastructure and brand trust -- all of which are difficult for fintech challengers to replicate quickly. From this perspective, AI could ultimately improve productivity and margins for large players that successfully integrate the technology into their platforms. Morningstar, in its analysis, also suggested that long-term investors should maintain exposure to quality wealth management firms, arguing that the industry's structural strengths remain intact despite short-term volatility. Also Read | Fallen angels return: Smallcaps stocks emerge from the shadows as Q3 earnings finally flip the script In the coming months, investors are likely to focus on three key developments: Large firms such as Schwab, Morgan Stanley and Ameriprise are expected to accelerate their own AI rollouts. The market will closely watch whether they can use AI to enhance advisor productivity and defend margins. Any evidence that AI is leading to lower advisory fees or reduced demand for traditional planning services could keep pressure on valuations. Management guidance in upcoming earnings calls will be critical. Investors will look for clarity on how firms see AI affecting costs, client acquisition and long-term growth. For now, the episode highlights a broader theme on Wall Street that artificial intelligence is no longer just a growth story for tech stocks; it is increasingly seen as a disruptive force across financial services. That shift is forcing investors to reassess which business models are most resilient in an AI-driven world, and which may need to adapt faster than expected.

Wealth Management Stocks Drop Amid AI Disruption Fears

Wealth management and financial stocks dropped sharply this week after fintech platform Altruist announced expanded AI capabilities, which ignited investor concerns about potential disruption to traditional advisory firms' business models. Altruist announced Wednesday that they will be rolling out enhanced features within its AI platform, Haley, including the ability to produce personalized tax planning and financial strategy tools for advisors. This technology will be able analyze client documents such as 1099 filings, pay stubs, and other statements, to generate analysis and recommendations within minutes. These processes are meant to streamline and improve efficiency for projects that are typically time consuming for advisors. While these developments are positioned as a productivity upgrade, the markets viewed this announcement as a potential threat to services like tax strategy and financial planning, which remain key revenue drivers for wealth management firms. The sell-off that has taken place this week has been widespread and significant. Major U.S. firms including Charles Schwab, LPL Financial, and Raymond James declined sharply, each dropping over 7% this past week, as investors feared traditional wealth management companies may be most susceptible to the development of automation tools. This downtrend has been a significant reversal from how these companies were performing year to date. LPL Financial, for example, was up over 8% this year prior to this week, before seeing those gains wiped out over the past three days. At the center of the concern for these Wealth Management companies is the impact AI will have on their fee-based businesses. AI tools can replicate important parts of traditional advisory work at lower cost and much greater efficiency, meaning the traditional pricing models that exist could become outdated. At the same time, startup fintech competitors such as Altruist, are using newer technology, and could deploy AI more aggressively than older firms. This technological shift will likely accelerate the competition within the Wealth Management industry, and force changes among established firms. Executives across the industry have fought back on the theory that AI will replace human advisors, instead emphasizing that the technology will only enhance productivity and client service for these advisors. There are some components of advisory service that AI cannot entirely replace. Among those components are relationship management, advisor/client trust, and personally tailored financial guidance. For as long as those advisory service components are still relevant, the future of wealth management may be more hybrid instead of fully AI reliant. What's Next Ultimately, this week's volatility signals a shift in investor mindset, while also forcing companies to re-evaluate their existing models in this new technological world. AI is no longer viewed solely as a benefit for innovation, it is also now being viewed as a competitive tool that will reshape how companies think of their existing business models, and what they need to do to evolve with the times. Whether this week's sell off proves to be short or long term for Wealth Management firms will depend partly on how effectively these firms are able to integrate AI into their business, primarily being able to demonstrate that it strengthens their advisory platforms for advisors and clients, thus lessening the advantage of AI driven fintech startups, like Altruist. Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Wealth management and tax prep stocks sink as Altruist launches new AI tool

Wealth management and tax planning companies fell on Tuesday after privately held financial software provider Altruist Corp. launched an AI tool that creates tax strategies for clients, generating concerns for other companies. Among the top decliners were LPL Financial Holdings ( The AI tool could threaten traditional firms by automating tax strategy creation, leading to concerns about losing efficiencies, fee compression, and market share shifts. Firms like LPL Financial, Schwab, and Raymond James dropped sharply in price due to concerns over AI-driven competition. Investors fear that AI will streamline services, intensifying competition, lowering fees, and potentially eroding margins for existing companies.

St. James's Place Leads European Wealth Managers' Tumble on AI Threat -- Update

Shares in the U.K.'s St. James's Place fell steeply as wealth management became the latest sector threatened by competition from AI-powered startups. The FTSE 100 company dropped 13.25% to 12.57 pounds in afternoon European trade on Wednesday, marking its largest percentage decrease since February 2024. The stock is the second-sharpest faller in the Stoxx Europe 600 index. Investors were responding to the launch of a new AI-powered tax planning tool from U.S. financial-technology firm Altruist on Tuesday. The startup said its tool could analyze tax returns and payslips without manual intervention, helping financial advisors produce "fully personalized tax strategies" in minutes. Some traders are betting AI innovation could reduce the need for financial advisors, in turn cutting into a key revenue stream for large wealth managers. The pressure on the sector comes after data providers and software companies fell amid investor concerns around AI rivals over the last week. Other U.K. wealth managers followed St. James's Place lower, with AJ Bell and Quilter dropping 4.7% and 5.2%, respectively. Rathbones Group was down 2.7%. Elsewhere in Europe, Swiss giant UBS shares dropped 3.1%--extending the stock's difficult start to the year--while private bank Julius Baer fell 4.2%. Italian wealth managers also fell steeply, led by FinecoBank which dropped 9.3% in afternoon trade. Banca Mediolanum, which has a large wealth management business focused on wealthy Italians, dropped 7.8%. Financial advice network-owner Azimut Holdings fell 5%. Some analysts see the selloff as overblown. "People are overreacting," Jefferies analyst Julian Roberts said. While tax planning is a major reason people go to advisers, it is only one part of a bigger, people-focused process, he said. "The value of people is that they can share experiences with you. It is not possible for AI to empathize." The stock market reaction to the Altruist launch is the result of traders "looking to replay a narrative that has played out in other industries, rather than representing any 'breakthrough' change in the industry fundamentals," RBC analyst Ben Bathurst said. St. James's Place manages over 220 billion pounds ($300.17 billion) via a network of nearly 5,000 financial advisors. In half-year results for 2025, published last July, the company said it was exploring the use of AI productivity tools for advisors. The company argued the new Altruist tool would aid wealth advisors rather than replace them. The group's director of financial advice, Alexandra Loydon, said the AI tool is designed for the U.S. tax system, which is different from the U.K.'s. "However, we recognize the role AI does and will increasingly play in advising clients. Advisers are using AI now and we are hugely supportive and keen to support developments in this space where tools can complement the role advisers play," Loydon said. Quilter chief executive Steven Levin said AI tools will not displace the role of human advisors, as the "human relationship, and the trust that underpins it, is not something AI can replicate today." Moreover, he argued that Quilter's earnings are insulated from threats to advisor charges. "The vast majority of our revenues and profits are generated from platform administration charges and asset management fees, and not from advisor charges," Levin said. U.S. financial stocks sold off heavily on the Altruist release Tuesday, with Raymond James falling 8.7%, while Charles Schwab dropped 7.4%. Though Raymond James recovered slightly at the U.S. open, gaining 0.2%, Charles Schwab dropped further, falling 2.3%. Write to Joe Stonor at [email protected]

US brokerages fall as AI-driven rout extends to financials

Feb 10 (Reuters) - Shares of U.S. brokerages fell on Tuesday after wealth management startup Altruist introduced AI-enabled tax planning features, as the still-nascent technology continues to fuel disruption fears for the incumbents. The selloff reflects growing investor anxiety toward legacy financial and tech firms as AI-first startups automate complex tasks that were long the exclusive domain of expensive human advisors. Charles Schwab slipped 6.4%, LPL Financial dived 8.3%, Raymond James Financial was down 7%, and Stifel Financial fell 6.5%. Wall Street giant Morgan Stanley fell 2.8%, while Ameriprise Financial slipped 6%. Financial markets, juiced for months with investor enthusiasm about the AI trade, were jolted last week as global software stocks sank on worries of disruption by vibe coding AI tools. Founded in 2018, Altruist acts as a self-clearing brokerage for investment advisers, offering a unified platform for account opening, trading, reporting and billing. Integrated into its Hazel AI platform, its latest feature automates the creation of personalized tax strategies by instantly analyzing client documents like 1040s, pay stubs and meeting notes. "Looks like it could potentially disrupt some of the retail brokerages. That's why the stocks are selling off here right now," said Dennis Dick, chief market strategist at Stock Trader Network, referring to Altruist's latest launch. Insurgent brokerages, including Robinhood and rival Public, have already been making headway into the sector via their low-cost and tech-enabled offerings. In November, Public launched an AI-powered brokerage that lets users build their own ETFs to invest in. Robinhood offers its Gold subscribers an AI-powered investing assistant that allows users to chat through trading ideas and enact orders. "When you get just one little thing, traders sell first and ask questions later. Every time we get one of these headlines, another sector bites the dust," Dick added. (Reporting by Ateev Bhandari in Bengaluru, additional reporting by Purvi Agarwal; editing by Alan Barona)