Jittery investors continue to punish stocks of companies that may or may not face disruption from artificial intelligence.
Last week it was software firms, then insurance brokers. Now, it’s financial brokerages that offer people planning advice — the likes of Charles Schwab, Raymond James, and Ameriprise.
The latest source of fear is a new AI tool from a startup called Altruist, which promises to automate tax planning.
The new AI application from Altruist is said to ingest documents like tax forms, pay stubs and notes, and spit out tax planning advice — all traditionally functions of a financial advisor.
“The AI is reducing the cost of intelligence,” said Thomas Shuster, research director at IDC Financial Insights. “When intelligence gets cheaper, the margins shift within the ecosystem. And so it is by definition, I think, highly disruptive.”
So which companies might get walloped? Sean Dunlop, director of financial services at Morningstar, said it’s hard to say.
“Investors have been looking to see what firms they think might be exposed to AI disruption, and that has been pretty wide ranging,” he said.
But it’s not clear firms are facing a serious threat at all, in part because we’ve seen this movie before. Financial advisors have offered automated options for over a decade, but clients haven’t used them much, said Dunlop.
“You’re looking at somewhere between 2% and 4% penetration of robo-advice solutions. I don’t think that’s a bad analog, as we look forward at what the impact of AI is going to be,” he said.
Such low uptake is no surprise to Isabella Loaiza at MIT, who has researched AI’s impact on the financial industry.
“In financial services, you need a lot of human capabilities, like opinion, empathy, hope,” she said.
Good luck getting those from an AI bot. Loaiza expects AI to augment the work of financial advisors — not replace them.
Related Topics