So-called robo-advisers look poised to shake up the U.S. financial services industry. Dozens of recently launched online providers, invariably backed by venture capital firms, offer asset management and financial planning to investors who aren’t looking for the personal touch that has always been a hallmark of wealth management. The total U.S. assets managed by this group, whose leaders include Betterment, FutureAdvisor and Wealthfront, are nearing $17 billion, according to New York–based research firm Corporate Insight.

Proponents say online-only advisers will carve out a market share like online discount brokerages did in the 1990s. More-bearish observers regard financial advice and management as something that the average investor is much less likely to entrust to a software program than filing taxes or booking a vacation. Recent strategic shifts by online firms appear to support the view that they will have trouble turning a profit without adding real, live humans to the mix.

Robo-advisers come in two flavors: those that manage assets on a discretionary mandate and those that provide advice only, often à la carte via financial planning and management software supplemented by educational materials on investing in stock and bond markets. Most of the former deploy passive algorithmic portfolio strategies weighted to the risk profile of an individual investor and use  exchange-traded funds.

These new market entrants have proven adept at gathering assets from Internet-savvy Millennials, the generation born between 1981 and 1996. But as investors acquire wealth and take on family responsibilities, they need services that only a flesh-and-blood adviser can provide, contends Mark Ciucci, senior vice president of advice at United Capital Financial Advisers.

“We don’t believe that investors will stay with the robo-advisers for the long term, for the simple reason that the closer they get to retirement and realize that another market downturn could derail all of their plans, they will seek advice that goes beyond simple portfolio allocation,” says Ciucci, whose Newport Beach, California–based firm has 47 offices throughout the U.S. and some $10 billion under management.

“We believe investors will work with a human adviser who can validate that they are on the right track in their unique circumstance and not based on some blanket concept like the 4 percent rule,” he adds, referring to a rule of thumb for the maximum that retirees should withdraw each year to avoid depleting their savings. Human advisers are valuable because they can look at an investor’s situation holistically, like a doctor choosing from a range of treatment options, Ciucci says.

Helping make his case is FutureAdvisor, a San Francisco–based robo-adviser that has focused on mass-affluent clients since it launched in 2010. At $140,000, the firm’s average account size is much larger than those of its main rivals, albeit with just 1,500 paying clients, versus 150,000 users of its free advisory platform.

FutureAdvisor plans to expand its personal services as customers’ needs become more complex, says Chris Nicholson, head of communications and recruiting.

For now, though, Nicholson sees an open playing field for online-only advisers to tap into an emerging investor group. “The important thing to remember is that robo-advisers are serving millions of mass-affluent families that wire houses and independent advisers never had time for because they were not a profitable demographic,” he says.

According to Nicholson, online advisers help their full-service counterparts by broadening the base of investing households and teaching future affluent families to expect and rely on financial advice. Although he thinks services like FutureAdvisor will eventually account for a big chunk of passively invested portfolios, he predicts that traditional advisers will maintain an advantage when it comes to providing more-complex and customized services.

The online upstarts may dismiss skeptics as Luddites, but their long-term prospects remain cloudy. Robo-advisers derive their business strategies from consumer technology conventions rather than financial services norms. They offer free or ultralow-cost services to bring investors on board, then upsell clients on premium products as account balances grow.

As a result, most of these firms have relied on venture backing, so they face the same challenge as any other mass-market start-up: hitting sustainable profitability before their capital runs out. Based on revenue extrapolated from stated fees and assets under management, combined with announced venture capital injections, none of the top players is close to turning a profit, industry insiders say.

Recent changes at two of the biggest robo-advisers suggest that such outfits are rethinking their business models. Rather than compete with humans, New York–based Betterment is offering a new service for independent financial advisers that will launch in beta in September. The four-year-old firm, which counts venture capital patrons Anthemis Group, Citi Ventures and Menlo Ventures among its investors as well as traditional wealth managers Bessemer Trust Co. and Northwestern Mutual Capital, has more than 41,000 direct clients.

Betterment’s ability to combine the low-cost online experience with human guidance is a win-win, co-founder and COO Eli Broverman says. “We see a great opportunity to work with advisers and empower them to have a best-in-class investing product driven by technology so they can spend their time focusing on other challenging areas like estate planning.”

However, it’s unclear if Betterment’s initial offering for advisers can set itself apart from existing customer relationship management and reporting vendors or the platforms offered by custodial broker-dealers. “It will ultimately all come down to the price point,” says Richard Dee, CEO of Lake Tahoe Wealth Management. “Planning software, cloud-based reporting resources and quantitative portfolio-rebalancing models are already very readily available and affordable.”

Dee thinks the most compelling offering for wealth managers considering a provider that combines planning, asset management and CRM services would be a low-cost product they could use for smaller accounts. He half-jokingly calls his firm a cyborg adviser; launched in 2012 and headquartered in Zephyr Cove, Nevada, it combines online access to advisers and portfolio information with high-touch personal service.

Wealthfront — the largest online adviser, with some 13,000 clients and an average account size of $90,000 — is setting its sights on the institutional marketplace instead of expanding into the more service-intensive segments of the individual-investor market like its competitors. Launched late last year, the firm manages $1.3 billion in assets.

Wealthfront takes the same approach to client services for 501(c) investors — nonprofit entities such as endowments and pensions — as for individual customers. The Palo Alto, California–based firm charges no fees for the first $1 million in assets and 25 basis points thereafter. CEO Adam Nash describes this move as a complementary offering rather than a shift in strategy: “This is a part of our mission, that everyone deserves sophisticated financial advice.”

Nash insists that Wealthfront remains focused on the Millennial market, which he estimates to account for 90 million people in the U.S., with a combined net worth of more than $2 trillion that could rise to $7 trillion by 2018. So far, the firm has raised some $65.5 million from the likes of Greylock Partners, Index Ventures, Ribbit Capital and Social+Capital Partnership, as well as angel investors, including Marc Andreessen and Ben Horowitz of Andreessen Horowitz and Yahoo president and CEO Marissa Mayer.

“Our company will grow its services with Millennials, similar to what Charles Schwab did for the baby boomers,” Nash asserts. Schwab, which germinated from an investment newsletter business in the early 1970s, revolutionized the discount brokerage industry, becoming a giant in just two decades. Whether robo-advisers’ venture patrons can wait that long for success is an open question.