Alaris Acquisitions CEO: AI-driven staff reductions could boost RIA valuations

Alaris Acquisitions, a sell-side M&A advisory for RIAs, is preparing for AI-driven job reductions at advisory firms to impact valuations in the booming M&A market for RIAs.

“Historically, staff has been really not looked at or touched when an acquisition is done, because the relationships are tied to revenue,” Alaris CEO Allen Darby told InvestmentNews. “And so the last thing the buyer wants to do is displace staff, and we're curious if that's going to really persist given the amount of advancement AI capabilities are in automating those lower end tasks.”

Employees working on clerical and administrative tasks within RIAs are most at risk of having their jobs replaced by artificial intelligence, Darby said. “[AI] hasn't trickled down in a meaningful way that would impact any M&A transaction, but it certainly will. I don't see how it's avoidable,” Darby added.

Alaris has been among the most active consultants on M&A deals in the RIA space, working on transactions with top firms such as Hightower, Edelman Financial Engines, Carson, Mariner Wealth Advisors, Beacon Pointe, Merit Financial Advisors, and Cerity Partners. Serial RIA investor Merchant Investment Management was a minority investor in Alaris since 2021, but the parties ended that investment partnership in 2024, Citywire reported.  

“A buyer could look at a team with a staff of 10 that's doing $3 million in revenue, and say that same $3 million in revenue in our ecosystem, we can either eliminate staff because we automated all of these tasks that staff are doing, or we know that same team of 10 can support twice the client load without sacrificing service. So how the buyers handle that P&L reality is going to be very interesting to see,” said Darby.

Charles Schwab's 2025 RIA Benchmarking Study has projected that the RIA industry will need to add over 70,000 new staff over the next five years to keep up with current growth trends. Darby's outlook suggests a short-term decline in staff headcount as RIAs adopt AI for replacing lower-end tasks.

“If [a seller RIA] is losing three to four employees and each one, for example, had a loaded cost of $100,000 each, that would be $300,000 or $400,000 of additional EBITDA that would flow through the valuation,” said Darby. “Does the seller get it, or does the buyer keep that? Or do they split it? So I think in the short term, it could be a very positive thing on seller valuations.”

Prior to launching Alaris in 2019, Darby led outbound M&A activities for United Capital from 2012 to 2019. Goldman Sachs acquired United Capital in 2019 and sold the firm four years later to the mega-RIA Creative Planning. 

In March of this year, Alaris announced its new matchmaking platform that analyzes multiple points of data on the seller from RIAs looking to be sold, and matches them with buyers that fit the profile of those looking to acquire that seller. 

“It does the work that used to take 50 hours, it does it in 30 minutes on analyzing P&L statements,” Darby said of Alaris’s matchmaking AI. “Instead of running an auction, we can rank them against the entire buyer pool measuring compatibility between the parties, and that's all enabled by AI.”