Days after investors of software firms were spooked by the launch of plugins by Anthropic’s Claude, shares of wealth management and brokerage firms tumbled after financial-technology company Altruist unveiled an AI tool capable of automating personalised tax strategies, triggering fears that AI could erode the relevance of traditional financial services.
California-based fintech firm Altruist launched an AI-powered tool on Tuesday designed to generate personalized tax strategies by automatically interpreting financial documents, eliminating the need for manual data entry.
In the United States, Charles Schwab slid 7.4%, while Raymond James fell 8.7%, its steepest single-day decline since the Covid-19 market turmoil in March 2020.
LPL Financial and Stifel dropped at least 3%, while banks with large wealth-management businesses also came under pressure, with Bank of America down 1.8% and Morgan Stanley falling 2.4%.
The selloff spread to Europe on Wednesday.
St James’s Place plunged more than 11% in London trading, AJ Bell fell over 6.5%, and Quilter declined more than 5%.
Rathbones slipped 4%, while Germany’s DWS, Switzerland’s Julius Baer and Swissquote, and Italy’s FinecoBank also posted sharp losses.
Earlier in the week, insurance stocks were hit by concerns that a new AI application from Insurify could reshape the insurance industry.
Adding to the sense of disruption, Spain-based digital insurer Tuio recently began offering home insurance quotes directly to ChatGPT users, raising the prospect that consumers could increasingly rely on chatbots to compare financial products.
“The fact that the tools, the applications are now being released is obviously putting more pressure on these companies’ stocks,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
What Altruist’s new tool does
Founded in 2018, Altruist provides technology and brokerage services to independent financial advisers and acts as a self-clearing platform for registered investment advisers.
Its latest feature, integrated into its Hazel AI platform, automates the creation of personalised tax strategies by analysing client documents such as tax returns, pay stubs and meeting notes without manual data entry.
The company launched Hazel in September 2025 and says the platform can interpret complex financial information instantly.
Some advisers have publicly praised the system, saying it improves productivity and reduces administrative workload.
Tax planning and estate strategy have long been among the most valuable services offered by wealth managers.
These areas involve significant trust, complexity and regulatory expertise, giving advisers strong pricing power.
The prospect that AI tools could automate parts of this process has unsettled investors who fear margin pressure and disintermediation.
Although Altruist does not serve retail clients directly, it competes with established players such as Schwab and Fidelity in the multitrillion-dollar RIA custody market.
The company does not disclose assets but says it serves more than 5,700 advisers.
Are advisers really at risk?
Experts said the market reaction highlights a shift in investor psychology.
Established firms such as Schwab, Raymond James and LPL have repeatedly emphasised their own investments in technology and digital tools on recent earnings calls.
Yet investors appear more focused on the potential threat from smaller, AI-native challengers than on the defensive capabilities of incumbents.
They cautioned that market reactions may be overstating the threat.
“While certain components of advice can be disintermediated or automated by technology, the advisor’s role has always required earning the fee through judgment, behavioural coaching, and personalisation,” analysts at Citizens wrote in a note.
They argued that deeper integration of AI could ultimately expand the scope of advisory services rather than compress fees.
“AI fits squarely into that pattern versus in competition, at least for the foreseeable future over the next handful of years, in our view,” the note said.
Analysts say selloff overdone
Others echoed that sentiment.
“We do not see much fundamentally new here with these developments, just the market fragility on the topic,” said Devin Ryan, director of financial-technology research at Citizens.
Sean Dunlop, director of equity research at Morningstar, said investors may be overlooking the resilience of certain business models.
“Our current expectation is that some of the safer businesses in the space are those that are relationship-driven, require significant amounts of capital like lending, or benefit from network effects and/or truly differentiated proprietary data,” he told Reuters.
Dunlop added that the selloff may have gone too far.
“We believe that many of these companies now trade at prices below our intrinsic valuations. So, if our long-term outlook is approximately correct, the selloff is already overdone to varying degrees.”
Ozkardeskaya concurred.
“Taking a step back, the sell-off in the software space has gone ahead of itself. The speed of the forecast about replacing the financial and insurance and legal services is somehow being overestimated.”
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