Meta’s new AI agent, Muse, is casting a shadow over financial stocks as investors express concerns that it could revolutionize the industry, leading to increased competition for human advisors.
Notable financial institutions, including Charles Schwab, LPL Financial, Raymond James, and Ameriprise Financial, saw declines of 0.8%, 1.4%, 0.9%, and 1.9% by 3:50 p.m. ET on Wednesday. This drop came as Muse generated significant buzz for its versatile capabilities since its launch earlier this month.
Wall Street banks like JPMorgan, Bank of America, and Goldman Sachs also experienced losses, falling 0.8%, 0.4%, and 2.2%, respectively, continuing downward trends from the previous day. Both JPMorgan and Bank of America have seen approximately 4% declines this week alone.
Mark White, a wealth advisor, mentioned that there’s a palpable anxiety among investors that Muse could attract so many users it might compel financial companies to overhaul their business strategies entirely.
“There’s a concern that people might turn to AI assistants first for financial advice and routine tasks,” he noted. “If that shift occurs, banks and financial firms might need to invest more in customer outreach, compete more aggressively on fees, and rethink their service delivery.”
Since its launch on September 8, Muse has garnered nearly a million downloads, surpassing competitors like OpenAI’s ChatGPT and Anthropic’s Claude. As of Monday, it topped the charts on both the Apple App Store and Google Play.
Muse was built to engage in conversational interactions and can efficiently handle daily tasks like managing email inboxes, filling electronic forms, making online purchases, and even overseeing personal finances.
“What’s really concerning is that if an AI can find better rates or switch users to better deals in an instant, consumer loyalty could diminish significantly,” Scott Martin from Kingsview Wealth Management remarked.
If Muse proves more adept at managing funds compared to conventional advisors, it could lead to fewer individuals seeking professional help, ultimately impacting the profitability of brokerage firms.
The rapid adoption of Muse ignited a sell-off among wealth management firms and major financial institutions that began on Tuesday and continued into Wednesday.
On Wednesday, the Dow Jones Industrial Average dropped 354 points, or 0.7%, the S&P 500 fell 0.9%, and the Nasdaq declined by 1.3% after previously achieving a record high.
This type of sell-off had earlier precedent when a company called Altruist launched an AI tool capable of creating personalized tax strategies for users.
Wall Street’s concerns about Muse are heightened because Meta has secured partnerships with companies like PayPal and Plaid, and already has a vast user base across Facebook, Instagram, and WhatsApp.
However, Muse has faced some resistance, particularly from Amazon, which has restricted the AI from making purchases on its platform.
Experts suggest that if financial companies can leverage the new technology effectively, the market dynamics could shift rather quickly.
“The real question is which firms will adapt quickly enough to take advantage of this situation,” White explained, pointing out that AI could enable financial services to reduce costs and enhance customer satisfaction.
Martin echoed this sentiment, suggesting that firms willing to engage with emerging technologies could become significantly more relevant.
For instance, Anthropic has recently introduced AI tools associated with its Claude bot in collaboration with Schwab and Vanguard.
Nonetheless, many consumers might still be reluctant to entrust their financial affairs to an AI, which could offer a temporary edge to traditional financial services.
“In wealth management, an AI might streamline information gathering or comparison processes,” White added. “But clients often require someone accountable to grasp their complete scenario, make judicious choices, and guide them when the stakes are high.”
Meanwhile, financial institutions are preparing for challenging conditions, especially after the 10-year Treasury yield recently touched a 19-year high, which typically dampens loan demand.
