AI could drag down RIA valuations, warns Alaris CEO Allen Darby

Allen Darby has spent the past two years building AI into how RIAs change hands. Now he's warning that the technology could cost slower-moving sellers money.

Darby, founder and CEO of Charlotte, North Carolina-based M&A advisory Alaris Acquisitions, told InvestmentNews that AI's impact on M&A is the topic everyone in the industry, Alaris included, is trying to figure out, and that he can argue it either way.

"Today average advisor supports typically somewhere between 80 and 120 clients. Okay. Well, when AI is fully baked into these businesses, we expect that number to go up quite a bit," Darby said in a video interview with InvestmentNews. "So, the average advisor might be able to support 200 client relationships with no impact to client service."

More clients per advisor means fatter margins and, in theory, richer multiples. The catch, Darby said, is that the firms capturing those gains sit mostly on the buy side.

"It's the buyers who are the ones investing in AI. It's not the sellers. The sellers typically are doing like maybe have a Claude instance or ChatGPT," he said. "The buyers are investing tens of millions of dollars into this."

Industry data shows how shallow most firms' adoption still runs. While 73% of advisory firms use AI in some capacity, only 6% run agentic workflows and 5% have integrated AI across their systems, according to Orion's 2026 Advisor Wealthtech Survey of 571 advisors.

Why AI could lower RIA valuations

When a buyer running 200 households per advisor looks at a seller running 100, it sees an overstaffed firm, Darby said, and it will price in the cost of fixing that.

"Because you're operating much less efficiently than we are, we're going to have to rightsize you. That's going to take us say two to three years where we're operating less profitably than we were before," he said. "So how will that express itself? Well, I can see it's going to express itself in a lower valuation."

It's a shift in emphasis for Darby, who told InvestmentNews last year that AI-driven staff reductions could boost RIA valuations as automation absorbed clerical work. Today, he leans the other way.

"If I were betting, I think I would probably bet a little bit more on it impacts the valuations negatively, but who knows?" he said.

The warning comes as RIA dealmaking races to a record pace and consolidators bulk up on scale. Alaris has grown with the market, doubling its team from nine people to 18 over the past year, according to the InvestmentNews 2026 5-Star Technology report.

The firm uses AI on its own side of the table. Its Lens platform, launched in February 2025, profiles more than 80 buyers and narrows each sale to a shortlist of three to five firms based on compatibility. Darby doesn't expect it to move prices.

"It is just going to facilitate the matchmaking and the cultural fit much more effectively as we automate the entire deal process. We call it digitizing the deal team," he said.