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Shares in Britain’s biggest wealth managers fell on Wednesday on concerns about potential disruption from a new AI-based investment tool.
Britain’s biggest wealth group, St James’s Place, fell more than 13 percent after US-based wealth management platform Altruist launched a tool to help financial advisers personalize clients’ investment strategies.
This development has spooked investors, raising fears about how technology could undermine traditional industry. In the US, Charles Schwab was down 2.4 per cent on Wednesday, extending the previous session’s 7.4 per cent decline.
As fears spread across the UK, AJ Bell fell 8 per cent while Quilter and Aberdeen Group both lost more than 5 per cent.
Technology and financial stocks were the worst performers in Europe on Wednesday, with the Stoxx Europe financial sub-index of 600 down 2 percent.
Swiss wealth manager Julius Baer fell 3 percent, and UBS – whose wealth management business is the continent’s largest – fell 2.8 percent. French asset manager Amundi fell 2 percent.
The sudden decline in the money managers’ shares highlights that companies once thought to be potential losers from AI are now suddenly in the crosshairs of investors.
The selloff echoes similar pressure on software, data and analytics stocks, which fell heavily last week when fears of disruption from Anthropic’s new coding plug-in tool hit the sector.
Shares of some of those companies fell more on Wednesday. FTSE 100 business data provider Relex was among the fallers, falling more than 6 percent.
Emmanuel Cau, head of European equity strategy at Barclays, said: “The pace of AI innovation is so fast that there is basically a new tool being launched every week – the market is looking for the next AI loser.”
The size of the move, he added, suggested a “sell first, watch later” stance on the part of investors, with perceived losses being sold “indiscriminately”.
Los Angeles-based Altruist said Tuesday that its new planning tool can help create a personalized tax strategy “within minutes” by analyzing tax returns, pay slips and meeting notes. It can also explore “what if” scenarios, including asset sale or retirement transition.
Jason Wenk, founder and chief executive of Altruist, said of the company’s Hazel platform, “It expands what an advisor can handle, raising the bar on results and making it much harder to justify average advice.”
As shares in UK wealth managers remained under pressure on Wednesday afternoon, Paul Manduca, chairman of St James’s Place, described the decline as “surprising and almost certainly an overreaction”.
“There is a high demand for face-to-face advice in a rapidly changing world,” he said, adding that the company uses AI tools to help provide services to clients.
Altruist’s announcement of a new planning tool has thrust the previously little-known company into the spotlight. Last April the group was valued at $1.9 billion in a funding round led by Singapore’s sovereign wealth fund GIC.
Groups including Salesforce Ventures, Geodesic Capital and Baillie Gifford also participated.
Panmure Liberum analyst Rae Mel said so-called robo-advice had existed for some time and that only providers using such models had failed.
He questioned whether individuals with complex financial planning needs, from pensions to inheritance tax, would “trust computers to solve it all”.
“Do you even know what questions to ask? Really rich people will always want personal service.”
Steven Levin, chief executive of Quilter, said the UK funds market remains an “extremely attractive structural growth opportunity”.
“Over the past few years we have been investing in an advisory and technology proposition to increase advisor productivity, allowing us to serve more clients efficiently,” he said.
Levin said the “vast majority” of Quilter’s revenue and profits were generated from platform administration fees and asset management fees, not advisory fees.
AJ Bell said he sees AI as an opportunity to improve efficiency and enhance the customer and advisor experience, and is particularly looking at using GenAI in customer service applications.
