Financial technology, commonly known as fintech, has exploded globally since 2008, with capital pouring into start-ups that are trying to make investing cheaper and easier by harnessing technology.
For example, fintech platforms raised more than $19 billion last year, according to a March report from KPMG and CBInsights. That's $7 billion more than 2014. Many of those resources have been directed at wealth management.
And therein lies the problem. For the financial advisor industry at large, many question whether fintech will prove to be a boon to their businesses or yet another rival.
An April survey by the CFA Institute found that a majority of more than 3,000 chartered financial analysts worldwide said they are worried that asset management is the most at risk for disruption by financial technology. That was followed by the banking, securities and insurance sectors.
"Advisors are treating it as a potential threat and also a potential opportunity," said Svi Rosov, an analyst at the CFA institute. "How it impacts advisors will depend on the industry with which they are working."
Advisors managing ultrahigh-net-worth clients were least likely to be affected, the survey found, while those serving mass-affluent clients have a lot more to fear from the so-called robo-advisors.
"Those advising in the high-net-worth segment may find fintech as more of an opportunity than a potential threat, because those investors have particularly complicated needs," Rosov said.
On the other hand, fintech levels out the playing field between bigger and smaller firms such as his own, according to certified financial planner George Gagliardi, founder of Coromandel Wealth Management.
"Fintech now permits small financial-planning operations to compete with larger firms without the capital outlay or expense that once would have required having a high level of assets under management in order to afford these tools," Gagliardi said.
Gagliardi said tech tools with client-accessible portals enable advisors to help the client be an active part of the planning experience rather than just the recipient of a printed report.
It's clear that fintech does give investors access to more powerful tools than before to make investment decisions. For example, Motif Investing is similar to a fantasy football league for funds, where individuals can build their own portfolios, using themes known as motifs.
TipRanks, a cloud-based application, ranks financial analysts. Later versions even let users see analysts' information inside articles they read.
In recent months, fintech firms have been partnering with traditional wealth-management businesses. In August, global asset manager BlackRock acquired robo-advisor FutureAdviser. And this past Monday, UBS announced it would form a "strategic alliance" with SigFig, an online portfolio manager.
SigFig CEO and founder Mike Sha said that worrying over whether or not fintech is a threat to the industry is a misconception.
"The industry I see today is one in which every single major incumbent player in fintech is viewing technology as a tool to help enable advisors — not to compete with them," Sha said.
The growing realization of how tech can serve clients better has resulted in an unprecedented number of partnerships between financial institutions and fintech companies, Sha said.
"Partnerships were kind of unheard of five to 10 years ago and rare three to five years ago, but today I think that both sides are approaching them more seriously than they ever have before," Sha said.
Other advisors, however, expressed doubts about fintech's ultimate reach. Michael Krol, CFO and chief service officer at Waldron Private Wealth, said fintech is "the second coming of the tech bubble."
"Though there is an abundance of private-investor capital flowing into the tech fad of this decade, many will not prove to have sustainable business models or long-term viability," he said.
"However," Krol added, "for the firms that survive, the financial industry will be theirs to upend ... The challenge for advisors is trying to segregate the ultimate winners from the also-rans."
According to Krol, robo-advisors also have certain built-in limitations.
"There are certain things that cannot be robotized," he said. "There will always be a place for person-to-person advice on important decisions, such as consulting on retirement."
Overall, though, Krol is positive on the impact robo-advisors can bring to wealth management.
"The industry came out of the recession with a black eye and left people asking why they were paying so many fees," he said. "Robo-advisors are in the position to mitigate the hefty cost, often performing similar services for the tenth of the cost in a direct consumer model."
Ultimately, the impact on financial advisors will depend on whether or not an advisor offers more than what a robo-firm can provide.
"For advisors that have the same value propositions as a robo-advisor, that's going to put a lot of people out of work," Krol said. "But I think that's ultimately going to be a good thing."
— By Laura Sanicola, special to CNBC.com