As automation redefines how exchange-traded funds (ETFs) are bought and sold, some of the most seasoned voices in wealth management are watching the trend with cautious interest.
Gil Baumgarten, a 41-year veteran of the industry and President of Segment Wealth Management, is one of them. While algorithmic and AI-driven trading is gaining momentum, he’s not convinced it’s the right fit for every investment philosophy—particularly his own.
“Program trading has been around for decades, and ETFs have always provided a clean access point to different market segments,” Baumgarten said. “But now, with AI entering the picture, a lot of that program trading has been taken to the next level.”
According to Baumgarten, automation has evolved from rigid rules-based systems into more dynamic, machine-led strategies capable of making and executing decisions with limited human oversight. It’s an inflection point for the broader industry—just not one his firm has decided to follow.
In April, automated trading accounted for a record 82% of all ETF trades on Tradeweb’s global platform. That surge, particularly during a period of market volatility, suggests growing trust in machines to handle the very moments where human intuition once held sway. Baumgarten sees the appeal. Increased automated volume compresses bid-ask spreads and deepens liquidity, especially for more thinly traded ETFs. “Automation lowers the friction of trading,” he said. “Higher volume—whether from human or algorithmic traders—narrows spreads. That’s a clear benefit to the marketplace,” he told Traders Magazine.
Yet despite the apparent market efficiencies, Segment Wealth has opted not to use algorithmic or AI-driven trade execution. The firm prioritizes tax efficiency and long-term positioning—two areas where short-term automation-driven trades can conflict with strategic goals. “Trading generates short-term gains and losses, which runs counter to our approach,” Baumgarten explained. “We’re building portfolios for long-term growth, and frequent trading creates tax drag that we work very hard to avoid.”
Still, Baumgarten is not dismissive of automation’s broader potential. He believes that as more traders—both institutional and retail—adopt systematized execution, the structural dynamics of the market will continue to improve. “More automated participation means more synthetic volume,” he said. “The same dollars get recycled, spreads shrink, and liquidity increases. That’s all positive.”
What automation is also changing, he noted, is the underlying nature of the investment profession. With advances in AI, many firms are looking beyond execution and exploring how technology can influence research, portfolio construction, and even client communication. Baumgarten himself has begun integrating AI into non-trading tasks. “I use AI to help generate content,” he said. “I was giving a speech and threw a bunch of ideas into an AI tool—it turned it into a coherent draft in seconds. That would’ve taken an employee a full day.”
For him, the real transformation isn’t about replacing judgment with automation. It’s about efficiency. Tasks that once required multiple employees can now be managed by one advisor with the right technology stack. “I never imagined I’d be running a $2 billion firm with just 11 employees,” he said. “That’s entirely because of how far the technology has come.”
Even so, when it comes to trade execution, Baumgarten is still hands-on. “We’re experimenting with ways to codify decision-making,” he said. “But I don’t think AI is ready to replace the human element in investment management. It may supplement our decisions, streamline workflows—but it’s not making the calls on behalf of our clients.”
As automated ETF trading accelerates across the market, driven by both algorithms and machine learning, wealth managers like Baumgarten are choosing a more deliberate pace. The tools may be evolving rapidly, but not every strategy is built to keep up with that speed—and sometimes, the long game still calls for a human touch.
