The artificial intelligence space that has seen newer and newer applications in a shorter span has suddenly found a new target: the fee-rich, relationship-driven world of wealth management. After privately held startup Altruist unveiled new AI-enabled tax-planning functions inside its Hazel platform, traders have started to punish legacy advisory and broking names on fears that high-value planning work could be automated and commoditised with better fees and less fuss. In the immediate Tuesday market selloff, Raymond James and LPL Financial each fell more than 8%, while Charles Schwab dropped more than 7%, a stark market verdict on how quickly automation fears can overwhelm narratives involving sticky clients and trusted brands.

What spooked investors was not just a generic AI assistant but a tool aimed at one of the advisory industry’s hardest-to-scale profit centres: tax strategy development. Altruist says Hazel’s tax-planning feature can read and interpret client materials such as 1040s, pay stubs, account statements, meeting notes, emails, and custodial or CRM data to produce fully personalised tax strategies within minutes, along with scenario modelling and exportable reports. This is precisely the kind of document-heavy, rules-plus-judgement workflow that historically supported premium fees and reinforced the value of human-led planning. The concern is that if AI can reliably generate strategies and the surrounding paperwork, incumbents may face fee compression and disintermediation as clients require fewer touchpoints, more personalisation, and a gradual erosion of the “human moat” in advice, especially for mass-affluent segments where pricing is most sensitive.

The wealth-management slide also fits a broader pattern of AI-driven disruption rippling through adjacent financial sectors as investors search for the next potential innovation. A day before the Altruist news, U.S. insurance broker stocks were hit after Insurify launched an AI tool built on ChatGPT, with industry names like Willis Towers Watson, Arthur J. Gallagher, and Aon suffering from sell-offs under similar panic. This trend has also extended into private credit and software-heavy corners of the market, with analysts warning that public-market concerns about AI undermining software products could spill into private equity and direct lending portfolios loaded with software exposure, creating a feedback loop of risk repricing.

Sources: BusinessWire, Reuters, Yahoo Finance
Photos: Unsplash

Written by: Ariff Azraei Bin Mohammed Kamal