BofA flags 3 ways agentic AI tools are reshaping the investing landscape
Bank of America analysts recently addressed the question of how the rise of agentic AI has impacted how people and firms trade.
Not, “what are they trading,” but literally, “how.”
The bank’s Craig Siegenthale wrote in a recent note that the fast-moving technology is already vastly reshaping the landscape for retail brokerages, institutions, and wealth managers, with the tools providing a clear advantage for digital-first platforms over the industry’s old guard.
“Agentic trading is one of many emerging technology-enabled capabilities that will fuel the existing bifurcation within US brokerage, aiding the neobrokers,” Siegenthale wrote.
Independent day traders have reported that turning to AI has given them an advantage as they navigate the market. But in recent months, data has shown that AI models such as Claude and ChatGPT have proven highly proficient at trading stocks on their own with little human input.
Here’s what the bank is watching.
A clear divergence between brokerages
Siegenthale said that he and his team believe so-called neobrokers will surge to the head of the pack as they deploy agentic tools and solutions for traders on their platforms. BofA named Robinhood, eToro, Webull and Interactive Brokers, as AI-enabled winners in this new phase of the race between retail brokerages.
“Agentic trading adoption will alter their monetization effort – increasing trading velocity and margin loan utilization but also reduce cash sweep balances,” Siegenthale said.
While these firms may benefit from AI, BofA sees others large incumbents in the space lagging. Siegenthale said that Charles Schwab, for instance, is at risk of disruption from more AI-native brokerages, and said the firm should be more proactive about implementing agentic AI tools to diversify its business model.
Accelerating institutional adoption
Big hedge funds and investment firms haven’t wasted time implementing AI for trading. Quant funds have been incorporating it into their trading strategies already, but according to BofA, the technology is quickly spreading among major firms.
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“More than ½ of all mid to large hedge funds have deployed at least one generative AI system with a near 100% adoption rate among quants, multi-strats, and market-makers,” Siegenthale said.
Firms he said were adopting AI include Citadel, Jane Street, Two Sigma, and Renaissance Technologies.
Wealth managers aren’t moving so fast
One corner of the financial sector isn’t rushing to rely heavily on agentic trading, though. BofA noted that independent wealth managers don’t seem as eager to shift operations to AI. This is partially because they often cater to an older demographic that might not be as receptive to sweeping technological changes.
“While wealth managers will leverage AI internally to improve their efficiency, manage client portfolios and improve client communication, we don’t think they will offer agentic AI solutions directly to their clients any time soon,” Siegenthale added”.