Wall Street hunts next casualty from AI threat to white-collar work

Stocks from insurance to property and wealth management punished after new tech launchesAuthor of the article:You can save this article by registering for free here. Or sign-in if you have an account.Wall Street has come alive to the threat from AI to broad swaths of white-collar work, indiscriminately wiping billions of dollars off stocks in sectors from wealth managers to insurance brokers and property services.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.After new AI tools such as Anthropic PBC’s Claude Code and Alphabet Inc.’s Project Genie triggered a sell-off in software companies and video games developers, investors have begun to fret about how soon automation could spread beyond the tech industry itself.Traders have seized on developments by little-known startups, triggering waves of selling for shares of incumbent players in the traditional financial services industry and beyond, from The Charles Schwab Corp. to CBRE Group Inc. Trucking stocks joined the selling on Thursday over threats to their freight brokerage businesses.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.“It feels like a mob with bats looking for the next hit, it’s indiscriminate,” said Peter Hébert, co-founder of United States tech investor Lux Capital Management and a former Lehman Brothers Holdings Inc. equity analyst.Launches of new tools from insurance AI start-up Insurify Inc. and tax planning chatbot developer Altruist Corp. hit financial stocks on both sides of the Atlantic and left investors asking which industries would be next.Traders are increasingly taking heed of warnings from AI founders such as Dario Amodei of Anthropic that the technology could soon become a “general labour substitute” for white-collar work.Azeem Azhar, founder of Exponential View, a popular AI newsletter, said stock market investors were extrapolating from the speed with which AI services have improved over the past year.Today’s abilities of agents– bots capable of completing a wide range of tasks with little to no human intervention – “would have been incomprehensible a year ago,” he said. That has created an “idea contagion” that many computer-based tasks could be automated.Benedict Evans, an independent tech industry analyst, said there has been a “massive expansion of the number of things” that can now be done by AI which previously required a human to “slog through in Excel.”In particular, the proficiency of Claude Code at writing software has plunged many programmers into an existential crisis as AI-assisted “vibe coding” gains popularity.“The reason so many people in the (tech) industry are sounding the alarm (about AI) right now is because this already happened to us,” software developer Matt Shumer wrote in a viral blog post last week. “We’re not making predictions. We’re telling you what already occurred in our own jobs, and warning you that you’re next.”However, even the tech investors who are betting on big returns from AI start-ups have been alarmed by the speed with which Wall Street has started to sell legacy companies.“I think there’s a little bit of an overcorrection happening,” said Andreas Helbig, partner at London-based tech investors Atomico. “It’s really hard to vibe code a bank.”“A lot of people are jumping at shadows,” said Evans. But after two decades in which tech start-ups have torn through publishing, advertising, retail and transportation, “it’s suddenly easy to look at a bunch of industries and say, maybe we could take a bunch of costs out with AI”.This week’s release of a new tax management tool by Los Angeles-based start-up Altruist prompted investors to dump shares in traditional financial services groups including Charles Schwab, Raymond James Financial Inc. and Stifel Financial Corp., as well as United Kingdom wealth advisers such as St James’s Place Wealth Management PLC.Even larger banks with wealth businesses such as Morgan Stanley were caught up in the selling.Finance veterans bristle at the idea their decades-old firms could be replaced by robot-toting startups.Paul Manduca, chair of St James’s Place, told the FT that the stock price move was “surprising and almost certainly an overreaction.” He said, “Face-to-face advice is in high demand in a fast-changing world.”But tech investors and entrepreneurs point out that incumbents may struggle to adapt and harness AI tools.“Generally I don’t think that the dip is unwarranted,” said Christian Owens, co-founder of Clove, a U.K.-based AI wealth management start-up.He believes that if the average wealth manager can advise around 100 clients, an AI-assisted adviser can have hundreds. Only an “AI native” company can reap those gains, he argues, because there is “too much organizational and institutional bloat in a traditional firm.”Altruist claims its AI tool, Hazel, will be able to automate the work of advisory firms “in minutes” by enabling them to open accounts, manage customer portfolios, suggest investment strategies, bill and report faster.“Hazel’s job is to basically eliminate the need for any sort of human involvement” in much of the workload of financial advisers, said Mazi Bahadori, chief operating officer at Altruist, which raised US$152 million last year from investors, including Singapore’s sovereign wealth fund GIC.“No doubt in my mind that [traditional financial firms] will figure [AI] out but by the time they do, companies like Altruist will probably have a 20 to 25-year head start on them,” Bahadori said.One executive at a big U.K. wealth manager insisted that AI’s ability to “‘mass personalize’ advice and cut costs [is] both a threat and an opportunity” for incumbents.Insurance brokers have also been in Wall Street’s line of fire after start-up Insurify released a tool that uses OpenAI’s ChatGPT to compare car insurance quotes.Shares in Arthur J. Gallagher & Co. and Willis Towers Watson Public Limited Co. (WTW), two of the world’s biggest insurance brokers, fell up to 15 per cent last week.William Hawkins, insurance equities analyst at KBW, said these large moves were based on “small press releases that have come out from American companies with very little track record or scale.” He said, “People are in a mood to be selling anyway, so this is a catalyst.”Hébert said the selling also reflects a dilemma for investors after huge rises in Big Tech valuations in the three years since ChatGPT launched. Even those banking on AI are reluctant to push tech stocks any higher.“People are looking to short companies that may suffer because they can’t go long on the other side of the trade,” he said. “We’re at the natural point in the cycle where people are looking for heads to bash.”© 2026 The Financial Times LtdPostmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. 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