When the robots come for human jobs, they’ll start the takeover on Wall Street. Here are just a few of the AI-related investing headlines that have crossed our desk lately that you need to know about just in case the Terminator comes knocking.
Robinhood rolled out its new robo-advisor back in March, a digital financial manager that constructs your investment portfolio for you. That sounds great—until you remember that the more trades you make on Robinhood, the more money the company collects. According to RIABiz, 67% of Robinhood’s 2024 revenue came from payment-for-order-flow, or executing trades using specific market makers like Citadel in return for a cut of the profits.
That’s why trading volume is so important for the company, and it’s also why initial reactions indicating that the robo-advisor tends to make copious and risky investments are so troubling. More than 40,000 Robinhood customers have handed over $100 million to their new robo-advisors—but whose side are these digital money managers really on?
Cyborgs don’t feel pain
Meanwhile, at UBS, humans are handing AI the keys to the kingdom.
Earlier this week the bank revealed that it has been using OpenAI and Synthesia to record analysts on video and recreate them as digital avatars. Then, AI models read through the human analysts’ stock reports, synthesize them, and create an AI-tailored script for the AI analyst to read on camera—leaving humans to simply double check the end product for accuracy.
Making sense of market moves
Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.
Early indications are that these AI videos are getting the same level of engagement as videos featuring flesh-and blood-analysts, but with 30% to 40% less effort to create them, UBS gleefully declared even as it laid the groundwork for a world where human analysts are no longer needed.
In lighter news, the online investing platform Public just unveiled a new tool called Generated Assets. Not only is that a fantastic AI/finance pun, it also allows investors to simply describe an idea that the tool instantly turns into a unique index. Some examples include "CEOs that are under 40," or "stocks that are unaffected by US tariffs," according to Public.
As Axios pointed out earlier this week, this new tech has the potential to completely disrupt the ETF industry. Assets under management across ETFs around the world rose by a record 27% in 2024 to $14.6 trillion, according to PWC, and the market could double to $30 trillion by the end of 2029—unless, of course, AI can offer a customizable and cheaper alternative.
We’re not trying to be alarmist here, we’re just saying that the world of investing is always evolving. AI has accelerated that process dramatically, and investors who can’t keep up will be left behind.—MR