It's not hype; consumers are aware of robo-advisors: Study

It looks like the buzz about robo-advisors is warranted.

New research shows that although only a small percentage of consumers are using robos, a large number of them are interested in the nascent online automated investment advisory services.

Stock market graph on smartphone
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While opinions vary on what this means for traditional financial advisors, many industry watchers see the technology as a way for advisors to supplement their practices.

"It's an opportunity to do everything better and faster and meet what consumers want," said Kim Dellarocca, a managing director at Pershing.

The research, conducted by management consulting firm A.T. Kearney, shows that 20 percent of "banked" consumers—those with a checking and/or savings account—are aware of robo-advisors, although just 3 percent of them actively use one.

But when it was explained exactly what a robo is, interest ran high: Sixty-nine percent of banked consumers with taxable assets are interested in robos to varying degrees, ranging from somewhat to extremely interested.

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Robo-advisors provide automated algorithm-based portfolio management advice at a lower cost than traditional investment management. Some also offer automatic portfolio rebalancing and tax-loss harvesting, and others combine the automated investment piece with personalized guidance from an on-staff financial advisor.

Services offered by financial advisors vary, too. Some focus on investment management, others do comprehensive financial planning, and others do something in between.

But what all have in common is the goal of meeting client needs in order to stay in business.

Dellarocca said advisors should do a gut check on their business models as they would with any new competition.

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"Study it and pay attention to how technology is changing client expectations," she said. "Make sure your strategy is in touch with what clients want and are willing to pay for."

Pershing, which provides advisors with services ranging from custodying client assets to technology solutions, recently surveyed advisors to get a pulse on how they view robos. The results showed that 19 percent think digital advice can complement their practice, 23 percent feel that it represents competition, and another 27 percent think it is irrelevant to their practice.

David Schneider, a certified financial planner and principal of Schneider Wealth Strategies, said it boils down to the fact that clients increasingly are relying on technology to make their lives simpler in all areas.

Read MoreRobos yet to prove worth: Analysts

"We need to be sure we are providing clients with the best possible experience," Schneider said. "That means harnessing technology to make the client experience more palatable and attractive to the younger generation."

Schneider said he thinks more clients will demand tech solutions for financial management but will also want a relationship with a person.

"The way we'll compete and stay ahead is by offering clients easy access to their [investment] holdings and their financial plan in one seamless portal," Schneider said.

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Eric Roberge, a CFP and founder of Beyond Your Hammock, is among those advisors who embrace the new robo technology.

"I think robos are great," said Roberge, who uses one for the investment management portion of his business.

"However, I also say an advisor can provide what a robo can't," Roberge added. "So advisors can team up with a robo and add their personal [services]."

Robert Schmansky, a CFP and founder of Clear Financial Advisors, has been offering a robo service for several months now. It is based on holistic goal-based planning, takes into consideration his personal assumptions about the markets and is reviewed by a human advisor.

Read MoreRobos a win-win: Advisor

Despite that higher level of service, so far it has drawn little interest.

"I think people, by and large, are still looking for personal relationships," Schmansky said.

Another consideration is that robos do not offer specific advice for financial issues, such as which mortgage is best or where to set up a child's college fund.

"There's no comparison for wisdom or emotional intelligence," said Dellarocca. "Some of those [financial] conversations are very complicated, and you can't [answer them] with algorithms."

"Automated advice is here to stay, but consumers should look at it as a way to augment your experience with a financial advisor." -Patrick Yip, director at Pershing

Robos are popular among younger adults, who typically have uncomplicated financial lives.

"As they start to accumulate assets, they'll probably want some [human advice]," said Patrick Yip, a director at Pershing. "Automated advice is here to stay, but consumers should look at it as a way to augment your experience with a financial advisor."

Read MoreDo seniors trust robo-advisors?

Dellarocca cautions consumers not to use a robo based solely on cost.

"If we just make decisions based on price, the results might not be what we want," she said. "To get distracted by a low price and not consider other factors, you're not optimizing your chances of a successful investment outcome."

—By Sarah O'Brien, special to CNBC.com