AI: From Robo Advisors to AI Wealthtech Industry Replacement
What AI Really Means for the Future of Financial Advice.
Hi Fintech Futurists â
Todayâs agenda is below.
AI: Altruistâs release of Hazel, an AI-powered platform that simplifies the process of tax planning and wealth management, has taken away the pricing power that wealth managers currently hold.
BUILDING COMPANY PLAYBOOK: Integrating AI Labor into your Fintech/DeFi business
PODCAST: Building the $3B Ethereum Treasury Company, with SharpLink CEO Joseph Chalom
CURATED UPDATES: Machine Models, AI Applications in Finance & Investment Outlook
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The next industry to be hit by AI is wealth management
As disposable software becomes more common in AI coding environments, Software-as-a-Service companies (like Salesforce) have suffered in the stock market.
But on the morning of February 10th, it was the wealth management industryâs turn to be hit by the AI re-pricing.
By the closing bell, LPL Financial lost 8.3% of its market value, erasing months of steady gains in a single afternoon. Charles Schwab fell 7.4%, Raymond James dropped 8.75%, and Morgan Stanley lost 2.4%. The UK was equally hit hard with St Jamesâs Place tumbling nearly 20%, while Aberdeen, Quilter, AJ Bell, and IG Group each fell between 1% and 7%.
The catalyst was a simple product update from a fintech startup that most people outside the wealth management industry do not know. This product is Hazel, an AI platform built by the RIA custodian Altruist. At just $60 per seat per month, the consequences have been significant.
We have talked with Altruistâs founder at the beginning of the journey and have covered the company in its fundraising and acquisition history.
The Hazel launch triggered a wave of fears that highly profitable line items for wealth managers could be commoditized through AI.
What Altruist Built
Altruist is a tech-led custodian and wealth platform for independent Registered Investment Advisors (RIA), serving more than 5,000 users. Hazel is its AI layer, first launched quietly in September 2025 after Altruist acquired Thyme, a Y Combinator-backed AI startup, last June.
For the first several months, Hazel handled tasks that impressed but didnât unsettle, such as meeting summaries, CRM entries, follow-up drafts, and answering questions about client portfolios in natural language.
Very useful, but not threatening.
February 10th changed the perspective entirely. Hazelâs new tax planning capability could now read a clientâs 1040, paystubs, account statements, meeting notes, emails, and CRM data simultaneously, then generate a fully personalised, client-ready tax strategy in minutes. Interactive âwhat-ifâ scenario modelling was included with options for bonuses, home sales, retirement transitions, lifestyle changes, etc.
âHazelâs tax planning feature flips the dynamic. It expands what a single advisor can handle, raises the bar on outcomes, and makes average advice a lot harder to justify.â â Jason Wenk, CEO, Altruist
That last sentence is the one that hit the trading floors.
The Numbers Behind the Panic
LPL Financialâs most recent full-year results, published just twelve days before the selloff, showed Q4 2025 revenue hitting a record $4.93B, a 40% year-over-year increase.
The firm manages $2.4 trillion in AUM across more than 32,000 affiliated advisors. Advisory fees are the core of its revenue. The picture was equally strong at Schwab, where Q3 2025 asset management and administration fees rose 13% year-over-year to $1.7B and core net new assets hit $137.5B, up 44%.
These are not struggling companies. They are at the top of their game, historically, which makes the selloff even more striking. Investors are now pricing in a future in which the core value proposition of human financial advice gets systematically automated away.
As of February 22, that discount has not reversed. LPLA is trading at $334.70, down 9.59% month-on-month and well below its 52-week high of $403.57. The market is holding its position.
The Deeper Structural Case
McKinseyâs January 2026 report on US wealth management in 2035, published just twelve days before the Altruist launch, projected that nearly 40% of financial advisors are expected to retire within a decade, creating a shortfall of roughly 100,000 professionals. It also flagged that $14T in assets is set to transfer to Gen X and $8T to millennials, generations shaped by digital fluency who expect immediacy, transparency, and purpose-driven engagement over traditional advisory relationships.
Advisors are already feeling the shift.
One firm, Childfree Wealth in Tennessee, told Financial Planning magazine that they had âcompletely phased out paraplanners and replaced them with AI, algorithms and automationâ, reducing meeting preparation from four to six hours to under one hour.
According to Gartner data cited by Caspian One, over 70% of financial institutions are now utilizing AI at scale, up from just 30% in 2023.
The Deloitte 2026 Banking and Capital Markets Outlook had forecast wealth management fees climbing in 2026. Instead, the industry got a structural repricing of its entire future earnings trajectory.
Not everyone is sounding the alarm. The day after the selloff, CNBC was already running the headline âAnalysts say buy the dip.â Jed Finn, head of wealth management at Morgan Stanley, compared the panic to robo-advisor hysteria from a decade ago, arguing the advisor-client relationship remains irreplaceable. While digital wealth did manage to consumer $500B+ of assets into ETF portfolios, it was not the tectonic shift of other fintech sectors, like for example, digital assets.
Raymond James upgraded LPL Financialâs stock to Market Perform shortly after, noting the stock was trading at approximately 14.1x 2026 EPS, roughly in line with its three-year average, suggesting the reaction was disproportionate to near-term earnings risk.
Independent advisors have had little trouble maintaining fee levels despite robo-advisors Betterment and Wealthfront arriving in the 2010s. But there is a critical difference, as previous AI tools were workflow accelerators. Hazel works across the advisorâs entire operational stack, client conversations, emails, CRM, custodial data, and synthesizes it into client-ready deliverables in real time.
What This Means for Investors and Founders
For investors, the immediate question is whether the selloff represents rational repricing or short-term panic. The upcoming earnings calls will be the first real test. Watch advisory fee rates, net new assets, and any forward guidance on AI-driven pricing changes. Firms with diversified revenue through interest income, institutional services or lending are better insulated.
For founders, the Altruist playbook is worth studying carefully. It acquired Thyme, embedded it deeply into custodial infrastructure, made it custodian-agnostic, priced it accessibly, and sequenced towards the highest-value advisory workflow, which for them was tax strategy.
The old moat of wealth management was information asymmetry and time. When a task that took four hours now takes four minutes, the pricing logic underneath the entire industry has to be reorganized. We think that there will be an influx of new entrants trying to build AI-first financial advisors.
The best one will inadvertently come from OpenAI or Anthropic. The open source models, like DeepSeek and Kimi, will come close second. But product superiority does not equal distribution, and therefore custodian relationships like those powered by Altruist will remain important.
đRelated Coverageđ
Building Company Playbook #9: Integrating AI Labor into your Fintech/DeFi business (link here)
Today, we continue our Building Company Playbook series, focusing on using the current state of the art in AI to turbocharge your creativity and business output. We focus on the following skills:
Personalization of your LLM/robot to think from your perspective
Navigating it to the right task and expanding capabilities
Relaxing enough to break the rules and bypass old assumptions
For prior series, here are the guides so far:
đď¸ Podcast: Building the $3B Ethereum Treasury Company, with SharpLink CEO Joseph Chalom (link here)
In this episode, Lex chats to Joseph Chalom, CEO of SharpLink, a Nasdaq-listed leader in digital asset treasury management focused on Ethereum. Joseph shares his journey from BlackRock and the Aladdin platform to pioneering digital asset strategies, including staking and tokenization. The discussion explores the evolution of fintech, the integration of crypto into institutional finance, and the future of decentralized finance (DeFi) and AI-powered financial agents. Joseph highlights SharpLink approach to making Ether productive for investors and the growing institutional adoption of blockchain technologies.
Curated Updates
Here are the rest of the updates hitting our radar.
Machine Models
Ethical and Bias Considerations in Artificial Intelligence/Machine Learning - Matthew G. Hanna & Liron Pantanowitz & Brian Jackson & Octavia Palmer & Shyam Visweswaran & Joshua Pantanowitz & Mustafa Deebajah & Hooman H. Rashidi
A Critical Field Guide for Working with Machine Learning Datasets - Sarah Ciston & Mike Ananny & Kate Crawford
AI Applications in Finance
â AI-Driven Payment Systems: From Innovation To Market Success - Merve Ozkurt Bas
The Rise Of Generative Ai Agents In Finance: Operational Disruption And Strategic Evolution - Inesh Hettiarachchi
Financial Modeling in Corporate Strategy: A Review of AI Applications For Investment Optimization - Olufunmilayo Ogunwole & Ekene Cynthia Onukwulu & Micah Oghale Joel & Ejuma Martha Adaga & Augustine Ifeanyi Ibeh
Investment Outlook
â Private Equity Outlook 2025: Is a Recovery Starting to Take Shape? - Bain & Company
â Global Venture Capital Outlook: The Latest Trends - Bain & Company
â Global Private Markets Report 2025: Braced for shifting weather - McKinsey & Company
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Average advice a lot harder to justify" might be the most important sentence in the Altruist announcement.
Not because AI does the analysis better - Hazel demonstrably does. But because it creates a baseline. Once every client can generate personalized tax strategies in minutes, advisors can no
longer compete on the analysis itself. The question shifts to what they add on top of it.
And that's a question most advisory practices aren't equipped to answer â not because they don't add value, but because they can't document where the value actually comes from. The advisor who looks at Hazel's scenario model and says "Scenario 2 is technically optimal but wrong for this client given what I know about their risk relationship history" â that judgment is invisible in current infrastructure. It doesn't compound. It doesn't get documented. It doesn't survive the advisor's departure.
The selloff is the market pricing in commoditization of analysis. But the real asymmetry isn't between advisors and AI. It's between advisors who can demonstrate judgment quality and those
who can't. I've been thinking about what the infrastructure for that looks like - not CRM notes or similar and audit trails, but structured records of why the human recommendation diverged from the AI baseline. That's a different kind of artifact than anything advisory practices currently produce.
It is happening already today - Gen X and millennial inheritors aren't just asking for digital fluency. They're going to ask "why did you recommend this, not the AI?" And they'll expect a structured answer.
Following.
This is cool. I probably could use a robo tax advisor.