AI Disruption Jitters: Altruist's Hazel Tool Triggers Sector-Wide Selloff in Wealth Management Stocks

On February 12, 2026, the wealth management industry experienced a significant market correction as shares of major brokerage and advisory firms tumbled following the introduction of Hazel, an AI-powered tax planning tool by Altruist, a wealth management technology startup founded in 2018 [1][2]. The tool’s announcement triggered a broad-based selloff that affected both U.S. and European wealth managers, reflecting heightened investor sensitivity to potential AI disruption across financial services.

The market reaction underscores the fragile investor sentiment surrounding AI’s potential to automate traditionally human-driven advisory services. Hazel leverages artificial intelligence to analyze comprehensive client data—including tax returns, pay stubs, account statements, meeting notes, emails, custodial data, and CRM information—to generate fully personalized tax strategies in minutes rather than the hours typically required for manual preparation [5]. The platform’s interactive scenario modeling capabilities allow advisors to present real-time projected tax outcomes for various financial scenarios, including bonuses, home sales, retirement transitions, and family lifestyle changes [5].

According to the AI Journal’s coverage of the announcement, a key differentiator for Hazel is its zero data retention agreements, which prohibit AI model providers from retaining any client data—a significant consideration for financial services firms with strict privacy and compliance requirements [5]. The tool’s availability extends beyond Altruist’s existing custody relationships, potentially expanding its addressable market to advisory firms regardless of their custodial arrangements [5].

The selloff was widespread and severe across the wealth management ecosystem, with the most pronounced declines affecting independent broker-dealer networks and custodial platforms most exposed to advisory fee compression concerns.

Ticker	Company	Decline	Closing Price
RJF	Raymond James Financial	~9%	$158.48 [1]
LPLA	LPL Financial	~8-10%	$360.58 [1]
SCHW	Charles Schwab	~7%	$99.25 [1]
AMP	Ameriprise Financial	~6%	~$472 [3]
SF	Stifel Financial	Notable decline	$119.66 [0]

The Financial Services sector overall declined

on the session, making it one of the worst-performing sectors, with weakness extending to related industry groups including Consumer Cyclical (-2.65%) and Industrials (-2.26%) [6]. UK-listed wealth managers also experienced notable declines, with St James’s Place (SJP.L), Quilter (QLD.L), and AJ Bell (AJB.L) all affected by the sentiment spillover [2].

Technical analysis reveals the affected stocks were trading near recent highs before the selloff, potentially amplifying the magnitude of the decline. Raymond James had appreciated +30.07% over the recent period while trading at $158.91, with the 20-day moving average ($167.75) above the current price indicating recent pullback from resistance levels [0]. Charles Schwab demonstrated even stronger momentum, up +49.33% and trading 69% above its 52-week low [0]. LPL Financial showed elevated volatility at 2.33% daily standard deviation, suggesting higher price swings that may contribute to continued volatility [0].

Multiple Wall Street analysts characterized the sector selloff as an overreaction to the announcement, emphasizing the longer-term evolutionary rather than revolutionary nature of AI adoption in wealth management.

acknowledged that “the market looked at this new AI tool and fears scope for other potential AI tools yet to come in wealth management, that could raise questions around sustainability of wealth management fee streams” but explicitly called the reaction “outsized and overdone” [3]. The firm maintains overweight ratings on Schwab and LPL, emphasizing that brokers and wealth managers are “well-placed to benefit from the productivity gains that could be unlocked by using AI” [3].

does not expect Altruist’s new AI tool to alter near-term prospects for wealth managers and views the pullbacks as tactical risk-reward opportunities, maintaining a bullish stance on Schwab as an immediate AI beneficiary [3].

provided the most measured perspective, characterizing AI’s entry into wealth management as “more like an evolution than a mass disruption” over the coming decades, noting that the industry will change but does not face imminent upheaval [3].

The market reaction to Hazel’s launch reflects several broader themes in AI disruption across financial services. First, investor sensitivity to AI displacement risk has increased following similar episodes in other sectors, including software stocks’ dramatic decline after Anthropic unveiled new AI tools and previous “SaaS-pocalypse” concerns about AI disrupting enterprise software business models [2][4]. This pattern suggests a market environment where disruption fears may amplify short-term volatility regardless of near-term fundamental impact.

Second, the differential impact across stock types reveals investor perception of exposure levels. Independent broker-dealer networks like LPL Financial experienced the steepest declines, reflecting concerns that AI tools could most directly impact the advisory fee structures that represent these firms’ primary revenue sources [1]. Custodial platforms like Charles Schwab face potential disruption to their integrated services model, while full-service wealth managers like Morgan Stanley (+64.22% over the recent period) showed relative resilience, possibly due to diversified business lines and established client relationships [0].

Third, the geographic spread of the selloff to UK-listed wealth managers indicates the market’s perception that AI disruption represents a structural industry trend rather than a U.S.-specific phenomenon [2]. This global reaction suggests that technology-driven efficiency gains could pressure fee structures across developed markets with similar advisory business models.

The affected stocks exhibited elevated volatility metrics before the selloff—LPL Financial at 2.33% daily standard deviation and Stifel Financial at 2.11%—suggesting continued price swings may persist [0]. Market reaction appears driven by sentiment and fear rather than fundamental changes, creating potential for both further downside and rapid recovery depending on subsequent developments. The Financial Services sector’s 2.46% decline as one of the worst-performing sessions indicates sector rotation risks if AI disruption concerns spread to related financial subsectors [6].

Fee compression remains the most significant medium-term risk, as AI tools successfully commoditizing certain advisory services could pressure wealth management fee structures. Incumbent firms may need to accelerate their own AI investments to maintain competitiveness, potentially affecting margins in the near term. Advisor productivity improvements from AI adoption could also reduce headcount requirements over time, affecting employment structures within the industry.

Analyst consensus suggests the selloff may present tactical entry opportunities for investors with longer time horizons. The overreaction thesis from Morgan Stanley, TD Cowen, and Citizens JMP implies that current pricing may not accurately reflect fundamental business value, particularly for firms positioned to leverage AI productivity gains rather than compete against them [3]. Demographic tailwinds—including an aging population and generational wealth transfer—continue to drive demand for advisory services regardless of technological evolution [3].

Complex wealth management involves emotional and relationship-based services that remain difficult to automate. Human advisors provide regulatory compliance and fiduciary oversight that AI cannot fully replicate. The productivity enhancement rather than replacement thesis suggests incumbents can adopt AI tools to improve their own operations while maintaining client relationships and regulatory expertise.

The February 12, 2026 market reaction to Altruist’s Hazel launch reflects investor anticipation of structural industry change rather than evidence of immediate fundamental disruption. The actual adoption rate of Hazel and similar AI tools remains unknown, and market pricing may be incorporating theoretical rather than realized disruption scenarios. Regulatory implications of AI-generated tax strategies versus human advice have not been clarified, and incumbent technology providers including Fidelity, Schwab, and TD Ameritrade have not yet announced their own AI initiatives in response. The medium-term impact on wealth management fee structures will depend on which specific services face commoditization and how advisory value propositions evolve to emphasize relationship-based and complex planning elements that AI cannot replicate.

Quantifying profitability impact requires detailed analysis of service-level exposure, and Altruist’s monetization strategy—whether Hazel will be monetized separately or used to drive custody asset growth—remains unclear. The sector’s technical position near recent highs before the selloff may have amplified downside, while strong momentum in names like Morgan Stanley (+64.22%) suggests underlying business strength despite AI disruption concerns.