If last year was the peak of inflated expectations, 2016 is turning out to be the year that robos get their shit together. Sure, some of the top firms are raising more money and some smaller ones have gotten taken out, but it seems expectations are getting realigned and realistic, as the hard work of building these businesses begins in earnest.

FT Partners, a boutique fintech investment banking firm headed by Steve McLaughlin, has essentially owned the transactions in the roboadvisor space. The firm recently published a 141 page presentation on digital wealth management and we pulled out just some of the salient features for you below.

Robos are next step in passive investing evolution

The story and excitement about roboadvisory isn’t just a tech story — it also has to do with another general trend in investing: the move away from active fund management to passive forms of investing. Over the past several years, money has flowed directly out of actively managed mutual funds and into their lower priced, mainly-indexed cousins, exchange traded funds. Large money managers are abandoning trying to beat their benchmarks and moving their portfolios into passively-managed strategies, as evidenced by the fact that over one third of all managed money is now in ETFs or other index products, up from 20% in 2009.

In The Insider, 60 Minutes’ Mike Wallace interviews Jeffrey Wigand, a Big Tobacco industry insider who turns informant. “That’s what cigarettes are for: a delivery device for nicotine,” the informant said. “Put it in your mouth, light it up, and you’re gonna get your fix.” Similarly, because they’re cheap, easily managed, and ubiquitous, roboadvisors are a great distribution tool for ETFs, and that’s why firms like Schwab and Vanguard have launched different flavors of roboadvisor platforms — to help distribute their own ETF products.

Same technology, different target clients

Roboadvisory is a growing, crowded market. Startups and incumbent financial institutions’ offerings tend to blend together. Some are purely software-driven, while others are hybrid offerings, combining software with a human touch. So there’s not really that much differentiation on the outside packaging.

But when you begin to drill down on the largest players, it’s clear that their businesses are very different. Personal Capital has the highest average account size ($125,900) and Acorns, which, at its core, is an app to encourage millennials to save more, has the smallest account size ($156). Some robos target the mass affluent while others have moved downstream, to collect every nickel and dime its users can spare. It will be interesting to watch the different techniques robos employ to ramp their AUM. Future M&A activity will be very much predicated on roboadvisors’ client makeup and marketing chops.

By the look of things, M&A is just getting started

Of course, no banking slidedeck would be complete without a recent transactions slide. There have been a number of recent deals in which an incumbent asset manager acquired a roboadvisor. BlackRock, Invesco, and Goldman Sachs have chosen their racehorses by buying instead of building their own. Others incumbents, like Schwab and Vanguard, have built and launched their own robo offerings. FT Partners believes that as more capital flows into the space, there will be more M&A and partnerships to come in the space:

“A number of newer firms are likely to be acquired by larger organizations that are looking to add or deepen their digital wealth management capabilities while only a relatively small number of new consumer brands are likely to achieve the level of scale (and funding) they need to survive on their own over the long-term,” the firm wrote.