UK wealth managers stocks tumble as AI fears ripple across Europe

• European financial services gauge fell as much as 1.8%, with Italian asset managers Banca Mediolanum and Azimut also declining 5.6% and 3.8% respectively
• U.S. brokerages had sold off Tuesday after startup Altruist launched AI tax-planning tools, extending a broader selloff that wiped nearly $1 trillion from the global software sector
• RBC Capital Markets analysts suggested the UK wealth manager reaction was driven more by short-term positioning than fundamental shifts, mirroring larger U.S. declines

Summary: UK Wealth Managers Tumble on AI Disruption Fears

Key Market Movements:

UK wealth management stocks experienced sharp declines on February 11, with St James's Place falling over 10% and Quilter dropping as much as 6.1% — both hitting their lowest levels since December. The European financial services gauge (.SXFP) declined as much as 1.8% by 0923 GMT.

Trigger Event:

The selloff followed steep declines in U.S. brokerage stocks on Tuesday, sparked by wealth management startup Altruist's introduction of AI-enabled tax-planning features. This development intensified concerns about artificial intelligence disrupting traditional financial services incumbents.

Broader Market Impact:

The contagion spread across European financial sectors:

• Italian asset managers Banca Mediolanum (-5.6%) and Azimut (-3.8%)
• Online trading platforms FlatexDEGIRO and Swissquote also declined significantly
• The selloff mirrors a broader tech rout that wiped out nearly $1 trillion in value from the global software sector last week

Analyst Perspective:

RBC Capital Markets analysts characterized the UK wealth manager reaction as driven more by short-term positioning than fundamental shifts, noting it mirrored larger U.S. wealth management declines.

Positive Exception:

London Stock Exchange Group (LSEG) bucked the trend, rising 2% after reports that activist investor Elliott Management built a stake and began engaging with the company to improve performance.

Market Implications:

The sharp reaction underscores growing investor anxiety about AI-driven disruption in wealth management and financial services, particularly affecting traditional players as fintech startups deploy advanced technology to gain competitive advantages.