A Conversation Worth Having
I want to share something with you that has genuinely changed how I think about the future, and about the work we do with our clients.
A trusted colleague of mine, a fellow financial professional I’ve known for years, recently shared his reflections on the artificial intelligence revolution. What struck me wasn’t just the intellectual depth of his thinking. It was a detail he mentioned almost in passing: a private conversation he had with his brother, who leads one of the world’s largest social media companies. His brother used a phrase that stopped me cold:
“People are becoming AI-pilled.”
It’s a reference to “The Matrix,” where taking the red pill means waking up to a new reality. And when someone who oversees billions of daily users describes the workforce that way, it’s not a metaphor. It’s a warning.
I believe this conversation matters deeply to every family we serve at Avanti. Whether you are approaching retirement, managing a business transition, or stewarding generational wealth, what is unfolding right now with AI will reshape the landscape of work, taxation, and financial planning more profoundly than anything we have seen in decades. I want to walk you through what we are watching and, more importantly, what it means for you.
The Workforce Is Splitting in Two
Here in early 2026, a bifurcation is happening in the American workforce that is unlike anything a traditional economic model anticipated.
On one side are professionals who have deeply integrated AI into their daily work—multiplying their productivity by three, four, even five times what they could accomplish alone. They have, as my colleague’s brother described, “taken the red pill.” They see the new reality and are operating within it.
On the other side are those who are aware AI exists, may have experimented with it, but have not fundamentally changed how they work. And then there is a third group that is either resistant or simply unaware of how fast things are moving.
What concerns me as your advisor is this: the gap between these groups is not growing gradually. It is compounding daily. And when productivity gaps compound this quickly, so do economic outcomes.
Why This Matters for Your Wealth—Not Just Your Career
You may be wondering what AI has to do with your retirement plan, your tax strategy, or your estate. The answer is: everything.
Consider one number that rarely gets the attention it deserves: approximately 75% of all U.S. federal tax revenue comes from labor income. Payroll taxes, individual income taxes on wages. This is the fiscal foundation of our government. Unlike many developed nations that rely heavily on consumption taxes, America funds itself primarily through people working and earning wages.
Now think about what happens when AI and automation begin performing significant portions of that work. Automated systems don’t pay payroll taxes. AI agents don’t contribute to Social Security. The productivity gains flow to capital owners, shareholders, business owners, technology companies - not to wage earners.
This is not speculation. It is arithmetic. And it carries profound implications for tax policy, government revenues, and ultimately, how we must think about protecting and growing your wealth.
The Uncomfortable Middle Ground
We are not yet in a world where AI runs everything, and the government can tax AI capital profits directly. But we are past the point where traditional labor-income taxation alone will sustain federal revenues. We are in the transition, and transitions are where the most consequential financial decisions get made.
Federal revenues will face pressure from three directions:
First, direct labor income loss. As AI displaces higher-wage professionals, and it is already happening in coding, paralegal work, and accounting, the federal government loses not just income tax but payroll tax contributions. For a $150,000 professional, that is roughly $40,000 or more in annual federal revenue per displaced worker.
Second, capital gains concentration. Productivity gains from AI flow to capital owners and shareholders, not wage earners. Long-term capital gains face a maximum rate of 20%, while ordinary income can be taxed up to 37%. Even if corporate profits double, the tax revenue per unit of economic output actually declines.
Third, policy incentives that accelerate the problem. The Tax Cuts and Jobs Act of 2017 cut the corporate tax rate from 35% to 21%. The One Big Beautiful Bill extended those cuts and restored 100% bonus depreciation, allowing businesses to immediately deduct the full cost of automation investments. Our government is actively incentivizing the very automation that will erode the labor tax base.
But There Is a Case for Genuine Abundance
I do not want to leave you only with the cautionary view. History is instructive here.
Every major technological leap, such as steam power, electricity, and computing, initially disrupted labor markets terribly. Factory workers saw real wages stagnate or decline for decades during early industrialization. But then something shifted: productivity gains became so large that real living standards rose dramatically for the median person. Robotics investment alone has been credited with contributing roughly 10 percent of total GDP growth in developed economies over the past few decades.
If AI generates 2–3% additional annual GDP growth, compounded over 20 years, we are looking at an economy 50–70% larger than today. Even if labor’s share of income declines from 75% to 60%, a massive shift—the absolute real income of workers could still rise because the total pie is so much larger.
This is the abundance scenario. It is not guaranteed. But it is plausible. And it fundamentally changes how you should think about positioning your wealth.
Five Scenarios Every Serious Investor Should Consider
At Avanti, we have never believed in betting everything on a single vision of the future. After 35+ years advising families through market cycles, tax law overhauls, and economic disruptions, we know that humility about prediction is not weakness - it is wisdom. That is why scenario planning is at the heart of everything we do.
Here are five scenarios we are actively considering for our clients and the planning implications of each.
Scenario 1: Muddle Through
Policymakers struggle to keep pace with change. Tax policy remains largely unchanged as the labor base erodes. Deficits widen. Political gridlock prevents meaningful reform.
In this scenario, the strategic imperative becomes clear: position your assets for a tax-free future. When revenues need to increase, politicians will look to where the money actually is and the uncomfortable truth is that it’s not the ultra-wealthy. You could tax billionaires 100% and it would not meaningfully dent the national debt. The broad middle class, successful, asset-rich families like those we serve, is where the money is. This means the conventional wisdom of deferring taxes may be exactly backward. If rates are likely to rise, why defer into higher rates? Consider Roth conversions, Health Savings Accounts, and permanent cash value life insurance structures that allow tax-free accumulation and distribution.
Scenario 2: The Robot Tax
Policymakers attempt to tax robots, AI systems, or automation investments, directly reducing depreciation benefits or imposing payroll-equivalent levies on companies that replace workers with machines.
This scenario is about managing policy risk alongside market risk. Avoid over-concentration in AI-heavy sectors. Consider diversifying into sectors where human labor retains a competitive advantage: healthcare services, education, and skilled trades. For business owners, this scenario demands honest strategic thinking about your exit timeline and how automation-dependent your margins have become.
Scenario 3: Fundamental Tax Restructuring
Policymakers fundamentally redesign the tax system—introducing a federal VAT, significantly increasing capital gains taxes, or implementing wealth taxes. Rules stable for decades change rapidly.
This is the most disruptive scenario for existing wealth strategies. The planning window for current strategies is shorter than most people realize. Business succession planning, estate freezing techniques, and harvesting gains at current rates all take on renewed urgency. Diversification across asset classes and ownership structures becomes critical.
Scenario 4: The Abundance Shift
AI productivity gains are so substantial that society figures out how to share the abundance—through sovereign wealth funds, deflation in goods and services, or dramatic improvements in healthcare, education, and infrastructure.
Here, wealth planning shifts from defensive to offensive. Equity stakes in AI-leveraged businesses, real assets that benefit from deflation, and positions in the companies driving this transformation become central to strategy. Your wealth is not just preserved, it grows alongside expanding abundance.
Scenario 5: Compressed Timeline
Any of the above scenarios unfolds much faster than expected, a 15-year transition compressed into 7 or 8 years. Emergency legislation. Retroactive changes. Wealth concentration accelerates rapidly.
Given what we are observing right now—the compounding productivity gaps, the acceleration of AI capabilities deserves serious consideration. Strategies that made sense over a 10-year horizon may need to be executed in 3 to 5 years. Procrastination becomes expensive.
How Avanti Is Positioning Our Clients
Our approach at Avanti has always been built around five interconnected pillars: Financial Planning, Asset Management, Tax Management, Protection Planning, and Legacy Planning. This holistic framework was designed to address every dimension of a client’s financial life, and it is precisely this integration that equips our clients to navigate the uncertainty ahead.
Financial Planning now means scenario-based stress testing rather than single-point projections. We build flexible strategies designed to hold up across multiple futures, not just the most likely one.
Asset Management shifts toward capturing AI-driven productivity gains while managing transition risk. Broad exposure to growth balanced against the real possibility that today’s sector leader becomes tomorrow’s cautionary tale.
Tax Management focuses on reducing your lifetime tax burden using today's tools. Roth conversions, charitable structures, proactive basis management, and estate planning techniques designed to eliminate transfer tax on multigenerational wealth. In an environment where tax policy may shift significantly, acting now at known rates is a form of wealth preservation.
Protection Planning guards against the concentration risk, market volatility, and longevity risk inherent in this transition. Notably, if AI enables precision medicine at scale, a genuine possibility, people will live significantly longer. Lifetime income protection becomes even more valuable in that world.
Legacy Planning takes on new dimensions when we consider generational wealth in a rapidly changing world. We help our clients think not just about transferring assets, but about preparing their families to steward those assets across a future that may look profoundly different from today. If your family business is in a sector facing disruption, that changes succession planning. If we enter an abundance scenario, that changes how you instill values around wealth and purpose in the next generation.
What We Want You to Take Away
Disruption is real, but so is abundance. The same forces that could disrupt labor markets could also create unprecedented prosperity. The question is how it is distributed and how quickly the transition happens.
Scenario planning beats prediction. Nobody knows which of these futures will unfold. But you can build a wealth strategy that is robust across multiple scenarios, and that is what sophisticated planning looks like.
The planning window may be shorter than you think. If the timeline is compressing and the evidence increasingly suggests it is the strategies, you have been putting off deserve attention now. The gap between early action and delayed action is widening.
Holistic matters more than ever. In a rapidly changing environment, you cannot optimize one dimension of your financial life in isolation. Tax strategy affects investment allocation. Business structure affects estate planning. Everything connects and that connection is exactly where Avanti’s value lies.
An Invitation to Have This Conversation
If you are already a client of Avanti, I want to reassure you: you are ahead of the curve. The integrated, scenario-based planning we have built together was designed precisely for uncertainty like this. If you would like to revisit your plan in light of these reflections whether around tax positioning, succession timing, or legacy structures, reach out and let’s have that conversation.
If you are not yet a client, and this resonates with how you want to think about your financial future, I would invite you to speak with our team. The Avanti team has been navigating complex, high-stakes wealth decisions for families and business owners since 1987. The AI revolution is the most consequential change we have seen in that time, and we believe the families who plan proactively for it will be the ones who look back and say they were ready.
The future is arriving faster than any of us expected. Let’s make sure you are prepared for it.
Don’t hesitate to reach out if you would like to have a conversation, 407-331-7330.