Wealth managers slump after Altruist unveils new AI tax planning tool

(Sharecast News) - Wealth managers were under the cosh on Wednesday after US wealth platform and custodian Altruist unveiled a new AI tax planning tool. Altruist said the new capability helps advisors create fully personalised 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.

"All of this is done within minutes," it said.

The new tool, named Hazel, also delivers interactive scenario modelling, allowing advisors to explore "what if" questions, such as the impact of a bonus, home sale, retirement transition, or family lifestyle changes, and see projected tax outcomes updated in real time.

Altruist founder and chief executive Jason Wenk said: "Tax planning is one of the most powerful ways advisors can improve outcomes, but it's also slow and mentally draining, especially in the busy tax season.

"Hazel's tax planning feature flips that dynamic. It expands what a single advisor can handle, raises the bar on outcomes, and makes average advice a lot harder to justify."

Wealth managers took a hit from the news and at 0905 GMT, St James's Place was down 8.7%, while Schroders, Quilter, AJ Bell, Rathbones and Transact owner IntegraFin were down 2.5%, 5.8%, 5.1% 4.5% and 4.4%, respectively.

On Wall Street, stocks such as Charles Schwab, Raymond James and LPL Financial suffered heavy losses on Tuesday.

Susannah Streeter, chief investment strategist at Wealth Club, said: "Fresh casualties from AI advances are falling on the investment landscape. This time, wealth management companies have been caught in the crossfire as artificial intelligence services are unleashed. The big reveal from tech start-up 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."

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "The market reaction looks to be more knee-jerk than fact-based, but this sort of volatility is likely to persist for a while yet."

On Tuesday, it was comparison websites taking a hit from worries about AI, with MoneySuperMarket parent Mony Group and GoCompare owner Future falling sharply after US online insurance agent and comparison platform Insurify launched what it claimed is the insurance industry's first ChatGPT app.

This followed a selloff in software firms last week.