AI-Driven Staff Reductions to Influence RIA Valuations, Says Alaris CEO

Alaris Acquisitions, a leading M&A advisory firm for Registered Investment Advisors (RIAs), is forecasting that AI-driven automation leading to job reductions will significantly alter valuations in the RIA sector. CEO Allen Darby highlights that while tradition favors retaining staff during acquisitions due to their revenue connections, the rise of AI technology will likely disrupt this norm by automating many clerical and administrative tasks. Darby remarked, "I don't see how it's avoidable" that AI will impact M&A transactions in this field.

Historically, the retention of personnel during acquisitions has been vital for maintaining client relationships, but this perspective may shift as RIA firms look to maximize earnings before interest, taxes, depreciation, and amortization (EBITDA) by reducing headcounts. For instance, if a firm generating $3 million in revenue operates with 10 employees, reducing that number could boost EBITDA by up to $400,000, subsequently influencing valuation considerations for potential buyers.

Research from Charles Schwab's 2025 RIA Benchmarking Study indicates that the industry will require over 70,000 new hires in the next five years to meet growth demands. This need contrasts sharply with immediate declines in workforce as AI integration progresses. In response to these trends, Alaris has also developed an AI matchmaking platform that streamlines the M&A process by quickly analyzing payroll and production data, facilitating quicker decision-making and compatibility evaluations between sellers and buyers in the market for RIAs.