Wary investors have been on guard against disruptive artificial intelligence—and ready to dump shares when they perceive threats. On Tuesday, it was the wealth management sector’s turn to get hammered.

Shares of Charles Schwab, LPL Financial, and other wealth management companies pummeled. Schwab’s stock sank 7.4% on Tuesday. LPL, the nation’s largest independent broker-dealer, dropped 8.3%. Shares of Raymond James Financial and Ameriprise Financial fell 8.8% and 6.2%, respectively.

Stocks overall slightly closed down, with the S&P declining by 0.3%.

The selloff in wealth management stocks comes just a day after insurance stocks were pounded on Monday over concerns that a new AI app from Insurify could disrupt the insurance industry. Investors who hold shares of wealth management may have been on lookout for disruptive threats, and they appear to have latched onto an AI-related announcement on Tuesday morning from Altruist, a privately held company that provides technology and other services to independent financial advisors.

Altruist said it launched a new tax planning tool for its AI platform, called Hazel, which it says helps advisors create fully personalized tax strategies for clients “within minutes.” The tax-planning tool does so by reading clients’ financial documents, including pay stubs and account statements. Altruist launched Hazel in September 2025. Some advisors have given Hazel positive reviews online, saying its tools are saving them time and improving their productivity.

Altruist, which was founded in 2018, doesn’t serve retail customers. But it does compete directly with Schwab and Fidelity within the multitrillion-dollar RIA custody sector, albeit as a smaller competitor. Schwab and Fidelity hold the vast majority of RIA assets. Altruist doesn’t disclose assets, but it says it serves more than 5,700 advisors.

A spokesman for Altruist declined to comment on the stock selloff, but says that Altruist believes its AI tools are unique within the industry. Founder Jason Wenk said in his company’s announcement that tax planning is an important, but time-consuming service for advisors’ end clients. “Hazel’s tax planning feature flips that dynamic,” Wenk said. “It expands what a single advisor can handle, raises the bar on outcomes, and makes average advice a lot harder to justify.”

Of course, Altruist isn’t the only firm investing in AI capabilities. Schwab, Raymond James, LPL, and other companies have been touting their own spending on technology on earnings calls. But investors currently appear less focused on the AI tools that incumbents are developing than AI tools being deployed by potential disruptors.

“At a high level, we do not see much fundamentally new here with these developments, just the market fragility on the topic,” Citizens analyst Devin Ryan wrote Tuesday. Questions about the role advanced technology could play in the wealth management industry have been present for “at least a decade.” He concludes, “This is not a sudden shock to the system; it is part of a long-running evolution.”

In addition to AI, some investors Tuesday may have been concerned about weak economic data released on Tuesday. Slower growth could affect wealth managers’ ability to attract net new assets, particularly from lower and middle income earners. A weak economy could also hurt bank stocks, which are economically sensitive. The KBW Bank Index fell 1.1%. Shares of Wells Fargo and Bank of America, which have large consumer banking and wealth management businesses, dropped 2.9% and 1.8%, respectively.

Shares of Robinhood Markets fell 1.1% on Tuesday.