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Shares in the UK’s largest wealth managers tumbled on Wednesday over concerns about potential disruption from a new AI-led investment tool.
St James’s Place, Britain’s biggest wealth group, fell 13 per cent after US-based wealth management platform Altruist launched a tool to help financial advisers personalise clients’ investment strategies.
The development has spooked investors, sparking fears about how the technology might undermine the traditional industry. In the US, Raymond James declined 8.7 per cent on Tuesday and Charles Schwab dropped 7.4 per cent.
As the fears spread to the UK on Wednesday, AJ Bell fell as much as 7 per cent, Quilter was down more than 5 per cent and Aberdeen Group declined 4 per cent.
Technology and financial stocks were the worst performers in Europe on Wednesday, with the financials sub-index of the Stoxx Europe 600 down 1.7 per cent.
Swiss wealth manager Julius Baer fell 4.2 per cent, and UBS — whose wealth management business is the continent’s biggest — dropped 2.9 per cent. French asset manager Amundi fell 2 per cent.
The sell-off echoes a similar move in software, data and analytics stocks last week, when fears about disruption from Anthropic’s new coding plug-in tools sent the sector sharply lower.
Los Angeles-based Altruist said on Tuesday its new planning tool could help create personalised tax strategies “within minutes” by analysing tax returns, payslips and meeting notes. It could also explore “what-if” scenarios including property sales or retirement transitions.
“It expands what a single adviser can handle, raises the bar on outcomes and makes average advice a lot harder to justify,” Altruist’s founder and chief executive Jason Wenk said of the company’s Hazel platform.
Paul Manduca, chair of St James’s Place, told the Financial Times: “Today’s fall in share prices is surprising and almost certainly an overreaction. We believe that AI provides an important opportunity to enhance the critical service we provide to clients. Face-to-face advice is in high demand in a fast changing world.”
Emmanuel Cau, head of European equities strategy at Barclays, said: “The pace of AI innovation is so fast that basically every week there’s a new tool being launched — the market is looking for the next AI loser.”
The size of the move suggested a “sell first, see later” attitude from investors, he added, with the perceived losers being “indiscriminately” sold.
Rae Maile, analyst at Panmure Liberum, said that so-called robo-advice had existed for some time and that providers solely using such models had failed.
He questioned whether individuals with complex financial planning needs, from pensions to inheritance tax, would “trust all of that to a computer to solve”, adding: “Would you even know which questions to ask? The really wealthy will always want a personal service.”
Quilter chief executive Steven Levin said that the UK wealth market remained a “hugely attractive structural growth opportunity”.
“For the past few years we have been investing in an adviser and technology proposition to enhance adviser productivity, allowing us to serve more clients efficiently,” he said.
Levin said the “vast majority” of Quilter’s revenues and profits were generated from platform administration charges and asset management fees, and not from adviser charges.
AJ Bell said it regarded AI as an opportunity to both improve efficiency and enhance the customer and adviser experience, and was using GenAI, particularly in customer service applications.
Last April Altruist announced it had raised $152mn from investors led by GIC, with groups including Salesforce Ventures, Geodesic Capital, Baillie Gifford also participating. The funding round valued the company at about $1.9bn.