New York, February 11, 2026—Shares of major U.S. wealth management and brokerage firms tumbled sharply on Tuesday amid mounting fears of AI disruption in the financial advisory sector. The selloff was triggered by fintech startup Altruist’s launch of an advanced AI-powered tax planning feature in its Hazel platform, raising concerns that automated tools could erode traditional revenue streams and replace parts of human-led advice.
The announcement sent shockwaves through Wall Street, with investors dumping stocks perceived as vulnerable to AI automation in wealth management, tax strategies, and personalized financial planning.
- LPL Financial (LPLA): Closed down 8.3%, after plunging as much as 11% intraday — one of its worst sessions in recent years.
- Charles Schwab (SCHW): Fell 7.4%, marking a steep drop as fears spread across the brokerage industry.
- Raymond James Financial (RJF): Dropped 8.75–8.8%, posting its worst day since March 2020.
- Morgan Stanley (MS): Declined around 2–2.4%, with other names like Ameriprise Financial and Stifel Financial losing 3–6%.
The rout extended the recent pattern of AI-driven selloffs, following sharp declines in software stocks last week triggered by tools from Anthropic and others. Analysts describe it as part of a broader “sell-first” mentality where any AI innovation sparks immediate sector-wide pressure.
What Sparked the AI Disruption Panic?Altruist, a Los Angeles-based self-clearing brokerage platform founded in 2018 and serving thousands of independent advisors, unveiled the new capability in Hazel — its transformative AI platform.
The feature analyzes client documents such as Form 1040s, pay stubs, account statements, meeting notes, emails, and data from custodial/CRM systems to generate fully personalized tax strategies in minutes.Key highlights from Altruist’s release:
- Eliminates manual data entry and applies deep tax logic for instant insights.
- Includes interactive scenario modeling (e.g., impact of bonuses, home sales, or retirement transitions).
- Available to advisory firms regardless of custody provider; standalone Hazel access priced at $60 per seat per month.
Altruist positions the tool as an enhancer for advisors, allowing them to handle more complex cases efficiently and deliver better outcomes. CEO Jason Wenk emphasized it “flips the dynamic” by making high-quality advice more scalable.
Industry Pushback and Long-Term Outlook Not everyone sees doom for human advisors. Jed Finn, head of wealth management at Morgan Stanley, compared the current panic to past “robo-advisor hysteria,” stressing that the advisor-client relationship remains irreplaceable.
He argued AI will augment rather than supplant professionals, similar to how robo-advisors now manage hundreds of billions but capture only a fraction of the market.
Bloomberg Intelligence analyst Neil Sipes noted the declines stem from “broader concerns about AI disrupting the financial advice and wealth-management model.”
Reuters and CNBC highlighted how AI-first startups are automating tasks once exclusive to expensive human advisers, pressuring legacy firms’ pricing power and margins.Broader Implications for AI in FinanceThis episode underscores the accelerating pace of AI adoption in financial services.
With Big Tech investing hundreds of billions in AI infrastructure, commercial tools like Hazel’s tax planner are emerging rapidly — challenging incumbents in advisory, tax planning, and beyond.
Market watchers are now focused on:
- Upcoming earnings reports from major brokerages for AI commentary.
- Regulatory developments around AI use in financial advice.
- Whether the sell-off proves overdone or signals deeper structural shifts.
While broader indices like the Dow hit fresh records amid resilience in other areas, Tuesday’s action in wealth management stocks highlights how quickly AI threat narratives can drive volatility in vulnerable sectors.
As AI continues to infiltrate high-touch financial services, the launch of tools like Hazel may mark a turning point in the debate over technology’s role in reshaping the wealth management industry. Investors should monitor closely as the “AI disruption” trade evolves across finance in 2026.
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