AI fears dog broker-dealer shares in 2026

With rising anxiety that cheap artificial intelligence functions may replace the cash-flow rich business of financial advisors, some key wealth management and financial advice firms saw returns on shares suffer over the first six months of the year. 

The S&P 500 was up 9.1% over the first six months of the year, but it’s been a tough slog for the broader brokerage industry, which recently has seen several years of strong returns.

The NYSE ARCA Securities Broker/Dealer index finished June at 1,089.56, an increase of 4.6% over the first half of 2026.

After  years of rising valuations, large wealth management and financial advice businesses are operating in a market dominated by anticipation of artificial intelligence and its potential to replace financial advisors. Corporate tax cuts under the administrations of President Donald J. Trump have also considerably aided the profits – and rising valuations – of wealth management firms.

“It feels right now that privately owned, PE-backed valuations for broker-dealers have flattened out after rising as high to the high teens, as measured by their price-to-earnings ratios,” said a senior industry executive who spoke privately to InvestmentNews about the matter. “Those same firms are now being valued by price-to-earnings in their mid-teens.”

“The rise in multiples has subsided,” the executive added. “Firms are going to have to figure out how to grow their way to higher valuations.”  

The fear is that AI would erode the profits in the wealth management industry, which for twenty years has seen a steadily rising amount of private equity investors buying financial advice and broker-dealer firms.

Through the end of June, shares of LPL Financial Holdings Inc were down 21.1% to $281.68 per share. The industry bellwether with more than 30,000 financial advisors, LPL Financial’s all-time share price high was July 30, 2025, at $397.54 per share. That's an 11-month price drop of 29.1%. 

LPL shares were not alone in suffering through the first half of the year. Morgan Stanley shares dropped 16.7% over the first half of 2026 to $209.04; the Charles Schwab Corp. shares decreased  7.65% to $92.27.

Even the new kid on the block, Robinhood Markets Inc., which is attempting to get a fledgling referral network of clients to advisors off the ground, was down 11.3% to $100.28 in the first half of 2026.

Meanwhile, brokerage Oppenheimer this week downgraded major U.S. investment banks including Goldman Sachs and Morgan Stanley in an unusual move, according to a report from Reuters, saying current valuations leave limited room for further gains despite a ‌favorable operating environment.

“Instead, it recommended investors sell large-cap investment banks and buy alternative asset managers, a group caught in a sharp selloff that many analysts view as ​overdone amid concerns about private-credit exposure,” according to Reuters.