Wealth managers get caught up in AI selloff as comparability websites prolong losses

Investor jitters over the impact of artificial intelligence on British companies have spread to wealth managers after price comparison websites suffered a selloff on Tuesday. 

Shares in leading wealth managers are down as much as 12 per cent this morning, following the launch of a new AI tool to help financial advisers. 

St James’ Place is trading down over 12 per cent, while AJ Bell, Quilter, Rathbones and other financial services companies all suffered falls of between 3 and 7 per cent.

Investors are concerned about the development of a new tool by Altruist Corp, led by former Wall Street execs, which will help advisers with tax strategies and client admin.  

LSEG and other data companies suffered a drastic sell-off last week, which has spread to other stocks

Susannah Streeter, chief investment strategist at Wealth Club, said: ‘The worry is that this is just the tip of the iceberg and fresh efficiencies will be unleashed by AI to disrupt the financial advice and investment industry and reduce the fees which can be charged. 

‘As the AI cards are shuffled, the pile of potential losers is mounting up, and speculation about which sector will be hit next is rife.’ 

It comes as price comparison websites came under pressure on Tuesday following the launch of a new tool by US firm Insurify, which uses ChatGPT to give users access to car insurance quotes based on their location, age and driving history.

Shares in Mony Group, which owns MoneySupermarket, dropped by as much as 13 per cent on Tuesday to their lowest level in 13 years. It extended its losses this morning, trading down as much as 2.5 per cent at 149p.

Future, owner of GoCompare, also saw its shares close down 3 per cent and is trading down 1.89 per cent this morning at 435.2p.

This week, Insurify’s chief executive Snejina Zacharia, said it was ‘redefining the insurance shopping experience by making it feel as simple as having a conversation.’

It also prompted falls in US insurance stocks, with Willis Towers Watson closing down 12 per cent on Monday, and Aon falling over 9 per cent.

In January, £1.3billion was wiped off Admiral’s market value over five days after AI-powered insurer Lemonade launched cover for self-driving vehicles.

It comes after last week’s selloff of London-listed data and software stocks following the launch of Anthropic’s new legal tool.

The new chatbot, which says it can automate legal work, casts doubt over whether older software and data analytics can keep up with faster-growing companies using artificial intelligence (AI).

Among the worst affected were the London Stock Exchange Group, Sage and Relx, which saw shares tumble as much as 14 per cent.

Relx is down over 4 per cent this morning while Sage dipped nearly 2 per cent. LSEG inched 2 per cent higher following reports that activist investor Elliott Management has built a stake in the firm.  

Dan Coatsworth, head of markets at AJ Bell said: ‘The share price slump in the owners of MoneySupermarket and GoCompare suggests investors are worried their business could be severally damaged if people start to obtain insurance using the likes of ChatGPT.

‘It suggests comparison portals will have to quickly find a way to get in on the game, such as embedding their services into ChatGPT and potentially offering bigger incentives to prospective customers as well as getting their brand to appear prominently in search results.’