After shares in European wealth and investment platforms fell sharply after Altruist launched an artificial intelligence tax-planning system for advisers on 10 February, Citi argued the reaction was overdone.
St James's Place PLC (LSE:STJ) dropped 15%, FinecoBank Banca Fineco fell 10% and Quilter PLC declined 8% following the announcement.
Citi said the sell-off was unwarranted, arguing that stand-alone robo-advice businesses have historically struggled to scale and that artificial intelligence tools are more likely to benefit existing adviser networks and direct-to-consumer platforms than disrupt them.
The bank expects AI to lower the unit cost of advice, which could drive greater adoption from currently low levels, while productivity gains help offset pricing pressure.
Stronger adoption should support net inflows, Citi said, with higher assets translating into increased platform and product fee income.
Analysts expect the role of artificial intelligence to feature prominently at Fineco’s investor day on 4 March.
Citi maintains 'buy' ratings on Fineco and St James’s Place and a 'neutral' rating on Quilter.
The bank added that the related sell-off in direct-to-consumer platforms, such as AJ Bell and Aberdeen's ineractive investor, was also unjustified, noting that its top platform pick, flatexDEGIRO, fell 11% despite remaining well positioned to benefit from AI-enabled efficiency gains.