Billions were wiped off the market price of wealth management stocks during one week in February. Investors were panicked that artificial intelligence (AI) chatbots and programmes will soon be able to manage people’s money.
While there may be limited sympathy for some of these firms, jobs are threatened. Whatever they say at first, these companies will inevitably seek to use AI to cut costs and degrade services.
More than £1 billion was wiped off the quoted value of St James’s Place, the biggest wealth manager in Britain.
Many tasks
Software companies shed $830 billion (£609 billion) in six days after Anthropic announced that its AI agent, Claude, can now complete a wide range of tasks. These include data analysis, marketing, legal and sales. Other service sectors such as law and accounting have suffered similar falls.
Insurance has been hit following approval of an insurance app on ChatGPT. The private credit sector, which has invested heavily in software companies, is at risk. So too are property companies, which saw share prices plummet on fears that bots may replace estate agents.
Stability fears
Investment advisors worry that some people may be comfortable using AI chatbots for financial advice. The greater risk in the financial sector is to the stability of banking and the wider economy – something already seen with “algorithmic” automated trading.
AI tools may not be revolutionary in themselves in many applications. But investors and the industry are alarmed at the pace at which the technology is evolving. And despite predictably soothing words from the World Economic Forum, the extreme level of spending on AI will most likely lead to an economic bust sooner or later.
• The Bank of England is reported to be cutting jobs to pay for AI – to improve its poor economic forecasting. As if AI is going to counter poor and inconsistent government monetary and fiscal policy. That would justify the hype!