What AI stock selloffs may be getting wrong in wealth management
We've seen sharp selloffs in wealth management stocks tied to AI headlines, rate moves, inflation chatter, and tariff uncertainty. Yet a fresh Fitch Ratings study shows the underlying businesses are doing the opposite: record combined client assets, net revenue up 17%, and pretax earnings up 21% last year across Ameriprise, Edward Jones' parent, LPL Financial, Raymond James, Charles Schwab, and Stifel Financial.
The signal: fundamentals are holding up. The noise: daily price swings.
Beyond the daily stock blips
Five of the six firms (all but Edward Jones' parent, which isn't publicly traded) are down year to date. A Feb. 10 selloff even followed the launch of an AI-powered tax tool by custodian Altruist. Layer on worries about private credit and post-Supreme Court tariff scenarios, and you get reflexive selling.
"Market volatility typically shifts earnings drivers, rather than uniformly pressuring earnings. The sector has demonstrated notable resilience despite macro volatility," said Henry Ye, a Fitch director and report co-author. Transactional revenues spiked as "trading volumes surged to record levels in 2025," though they could cool if volatility and sentiment fade.
The metrics that matter for managers
Client assets remain the north star. Robertson Stephens Wealth Management lifted AUM 23% in 2025 to $8.7 billion through two acquisitions, market gains, and organic growth. As CEO Raj Bhattacharyya put it, "The one I care about is the client assets - what do our clients trust us with as a company?"
For large public firms, cash balances, net interest margin (NIM), and trading activity drive earnings. Record transaction volumes in 2025 benefited from volatility, record equity markets, and broader access - including extended-hours trading and digital asset exposure - that kept clients engaged.
Firm-level pressures and edges
Expenses bit some players. LPL's heavier advisor onboarding and recruiting costs weighed on profits. Stifel absorbed a one-time regulatory charge. On the other side, Schwab expanded NIM through client cash, securities-based lending, and paying down supplemental borrowings.
"Interest rate moves remain a key swing factor," Ye said, noting Schwab repositioned its balance sheet to reduce rate sensitivity and still projects solid 2026 earnings even assuming two Fed cuts. Diversified balance sheets and conservative securities-based lending practices with strong collateral have held up in past bouts of volatility - and they're useful advantages in advisor recruiting and against AI-first challengers.
Where AI actually matters
Big firms are spending real money where it shows up in margins. "We view substantial technology investments as increasingly essential for competitive positioning," Ye said. Raymond James' planned $1.1 billion technology spend in 2026 and active deployment of AI tools are a clear scale play, aimed at advisor efficiency and client growth.
For executives making the call on budget and scope, see AI use cases that move the needle - tax workflows, compliance summaries, client communications, lead scoring, and investment operations - not just demos. If you're framing your roadmap, this overview may help: AI for Executives & Strategy.
Management checklist for 2026
- Track client assets beyond market beta. Separate market lift from organic growth and M&A. Tie advisor comp and marketing to net new assets, not activity alone.
- Watch NIM sensitivity. Model cash sorting, securities-based lending utilization, and balance sheet actions under multiple Fed paths. Communicate rate scenarios and levers to the board.
- Treat volatility as a revenue lever. Strengthen trading infrastructure, extended-hours access, and product shelf (including digital assets where appropriate) to capture episodic volume.
- Be ruthless on acquisition and onboarding costs. Standardize advisor transitions, centralize compliance, and measure time-to-productivity. Require clear ROI for recruiting packages.
- Modernize platforms with a bias to automation. Prioritize AI that eliminates manual steps in tax, service, compliance, and reporting. Build governance early: data quality, permissions, audit trails.
- Tighten credit risk. Keep conservative collateral and concentration limits for securities-based lending; align with FINRA guidance. Stress test client portfolios against drawdowns.
- Use M&A to gain capabilities, not just assets. Go after niche planning expertise, tech, or distribution. Plan for fast integration and advisor retention.
- Compete for experienced advisors on platform and service, not price alone. Offer cleaner workflows, strong transition support, and clear equity/ownership paths.
Outlook
Consolidation will continue, scale will matter, and there's plenty of wealth in motion. As Bhattacharyya said, "America gets wealthier every year." The firms that win will convert that tailwind into client assets, keep costs in check, and make AI spend show up in advisor capacity and client experience.
Stocks will keep reacting to headlines. The businesses underneath look set to grind higher.
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