AI panic 'spreads': new tools spook wealth management stocks, Charles Schwab drops over 9% intraday

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The threat of Artificial Intelligence (AI) to traditional business models is spreading through the stock market, expanding from software companies to more industries. Wealth management stocks have become the latest “victims.”

On Tuesday, June 10 (Eastern Time), financial software provider Altruist Corp. launched an AI tool for formulating tax strategies, which can help financial advisors develop personalized strategies for clients and generate payrolls, account statements, and other documents. This functionality directly targets the core business of traditional wealth management companies.

Altruist’s tool release immediately triggered concerns in the market about the business prospects of traditional wealth management companies. During Tuesday’s session, Charles Schwab (SCHW) fell as much as 9.5%, Raymond James Financial Inc. (RJF) and LPL Financial Holdings Inc. (LPLA) fell over 9% and 10% at midday respectively, and Stifel Financial Corp. (SF) plummeted more than 7% at one point.

Bloomberg Industry Research analyst Neil Sipes said, “This sell-off seems to be related to concerns about AI disrupting the financial advisory and wealth management model.” Investors are mostly worried that efficiency gains will dissipate due to competition, leading to long-term fee compression and potential shifts in market share.

Sipes pointed out that investors are currently focused on the competitive pressure brought by increased efficiency, which may lead to long-term fee compression and shifts in market share. This worry reflects a reevaluation of AI tools replacing human services.

The slump in wealth management stocks was preceded by similar heavy losses in insurance broker stocks. Last week, the new tool released by AI startup Anthropic triggered a large-scale sell-off of software stocks, exposing the market’s deep anxiety about AI disrupting traditional industries.

Insurance Broker Stocks Hit Hard on Monday

The day before the crash in wealth management stocks, insurance broker stocks experienced the impact of new AI tools. The S&P 500 Insurance Index fell 3.9% on Monday, marking the largest single-day drop since October 2025.

Willis Towers Watson PLC fell 12% on the day, the biggest drop since November 2008. Arthur J Gallagher & Co. dropped 9.9%, and Aon PLC fell 9.3%.

Bloomberg Industry Research insurance analyst Matthew Palazola said the sell-off may be linked to new AI tools from the private online insurance shopping platform Insurify and Anthropic. Insurify’s application uses ChatGPT to compare car insurance rates. By entering vehicle information, client credit history, driving record, and other details, users can complete a rate comparison. The app was launched on February 3.

Palazola pointed out, “These applications may pose threats to parts of the consulting business of insurance broker companies, but we believe they are more like efficiency amplifiers rather than existential threats.”

Anthropic Triggers Software Stock Sell-off

Last week, concerns about AI applications disrupting multiple industries flooded the stock market, sparked by new tools released by AI startup Anthropic. These tools aim to automate work tasks across legal services, data services, and financial research.

After the announcement, investors sold large numbers of stocks—from Expedia Group Inc. to Salesforce Inc., to the London Stock Exchange Group—none were spared. Before stocks rebounded last Friday due to bargain-hunting, the popular software ETF, iShares Expanded Tech-Software Sector ETF (IGV), dropped about 12% over the first four trading days last week.

Canada-listed Thomson Reuters plunged 20% last week, the largest weekly drop since the company’s listing in the 1990s. Financial research firm Morningstar Inc. experienced its worst week since 2009. Software developers HubSpot Inc., Atlassian Corp., and Zscaler Inc. all fell more than 16%.

Media statistics show that a total of $611 billion in market value was wiped out last week among 164 stocks in the software, financial services, and asset management sectors.

Disruption Threat Becomes New Market Reality

Futurum Group CEO Daniel Newman commented last weekend: “Things are evolving week by week, day by day. The range of companies potentially affected by AI is expanding every day.”

Since the launch of ChatGPT by OpenAI at the end of 2022, AI’s disruptive potential has been a hot topic. But until last week, market attention focused mainly on beneficiaries. As hundreds of billions are invested in computing power, investors have flocked to stocks of chip makers, network equipment companies, energy suppliers, and material producers seen as beneficiaries.

This strategy has paid off handsomely. Since the end of 2022, indices tracking semiconductor-related stocks have more than doubled, IGV is up 61%, and the S&P 500 has risen 81%.

But companies such as Anthropic, OpenAI, and Google are rapidly launching new tools, making the once theoretical disruption appear more imminent. In just the past month, Google released a tool that can create immersive digital worlds from simple image or text prompts, shaking up video game stocks. Anthropic’s work assistant based on Claude coding service triggered a plunge in software stocks.

KeyBanc software analyst Jackson Ader said: “If your performance and guidance miss expectations, it raises the question: what confidence can we have in the sector as a whole?”

Traditional software makers have been hit particularly hard. Salesforce is down 48% from its historical high in December 2024, and ServiceNow has dropped 57% since peaking in January 2025.

According to Goldman Sachs prime brokerage data, software is the category with the largest net sales among all sectors so far this year. As of February 3, hedge funds' net exposure to software dropped to a historic low of less than 3%, compared to a peak of 18% in 2023.

However, Bloomberg Industry Research compiled data show Wall Street analysts’ profit outlook is actually improving. Analysts expect S&P 500 software and services components' earnings to grow 19% in 2026, higher than the 16% increase forecast a few months ago.

Michael Mullaney, global market research director of Boston Partners, said: “Everyone assumes operational metrics will bottom out. I’m skeptical. Even with disruption, profits and margins may ultimately remain healthy. If I were a growth-fund manager, I would buy on dips.”

Risk Warning and DisclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ special investment goals, financial status, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular situation. Invest accordingly at your own risk. ```