For decades, financial advisors have competed on investment performance.
The conversation centered on selecting the right mutual funds, identifying the best managers, and building diversified portfolios capable of outperforming market benchmarks. While those responsibilities remain important, the definition of value is changing. Today’s clients expect more than market exposure. They expect investment portfolios tailored to their financial goals, tax circumstances, legacy objectives, and personal preferences.
This shift is transforming wealth management, and few investment solutions embody that evolution more than Separately Managed Accounts (SMAs). Once reserved almost exclusively for ultra-high-net-worth investors, SMAs have become one of the fastest-growing segments of the managed account industry. Advances in technology, lower investment minimums, sophisticated portfolio management platforms, and increasing demand for personalization have positioned SMAs at the center of modern portfolio construction.
For financial advisors, this isn’t simply another investment vehicle. It’s an opportunity to deliver a higher level of advice while creating a more differentiated client experience.
The growth is no longer a forecast — it's happening
Cerulli Associates projects retail SMA assets will reach roughly $3.6 trillion in 2026, up from $2.2 trillion just three years earlier and a fraction of that a decade ago. Zoom out to the full managed account universe — SMAs, UMAs, and related structures — and the number is even larger: assets climbed 19.8% to $13.7 trillion in 2024 and are projected to grow at a 12.3% annual clip toward $31.8 trillion by 2028. SMA and UMA programs specifically posted five-year compound annual growth of 18.3% and 18.7%, respectively.
This isn't a story about a niche product finding a bigger audience. It's a structural shift in how advisors are expected to deliver value, and it's happening alongside a broader move toward fee-based revenue, with the share of advisors earning at least 90% of revenue from fees expected to reach 54% by 2026.
From Products to Personalized Portfolios
The wealth management industry has undergone several transformational shifts over the past forty years.
The 1980s emphasized individual stock selection.
The 1990s brought widespread adoption of mutual funds.
The 2000s saw explosive growth in exchange-traded funds (ETFs).
The past decade ushered in model portfolios, digital advice, and automated portfolio management.
The next evolution is personalization.
Investors increasingly expect personalization in every aspect of their financial lives. Streaming platforms recommend movies, retailers anticipate purchases, and travel companies customize experiences. Wealth management is following the same path. Rather than asking clients to fit into standardized investment products, advisors can now build portfolios around each client’s unique circumstances.
Customization is becoming an expectation rather than a luxury.
Tax Management Is Becoming Alpha
Investment returns matter. But after-tax returns matter even more.As markets become increasingly efficient, advisors are searching for additional ways to create value beyond security selection. Tax management has become one of the most effective levers available.
Following years of strong equity market performance, many investors hold significant unrealized capital gains. Taxes have become one of the largest drags on long-term wealth accumulation, making after-tax returns just as important as pre-tax performance.
Unlike pooled investment vehicles, SMAs allow advisors to manage taxes at the individual account level. That means advisors can harvest losses throughout the year, selectively realize gains, transition concentrated positions more efficiently, and coordinate tax decisions across multiple accounts within a household.
Tax management is no longer a once-a-year exercise. Increasingly, it is becoming an ongoing source of value.
For many clients, reducing taxes can add as much long-term value as identifying the next winning investment. The result is a more comprehensive definition of investment performance—one that focuses on what clients actually keep after taxes.
Customization Creates Better Advice
Every client’s financial situation is different. Traditional investment products often require compromises because every shareholder owns the same portfolio. SMAs eliminate many of those compromises.
This flexibility enables advisors to deliver investment portfolios that reflect each client’s circumstances rather than forcing clients into standardized solutions.
Greater Transparency Builds Greater Confidence
Clients increasingly want to understand what they own.
Unlike pooled investment vehicles, SMAs provide visibility into the individual securities held within the portfolio. Advisors can explain exactly why certain companies are owned, how the portfolio is positioned, and where opportunities or risks may exist.
This transparency creates more meaningful portfolio conversations and helps reinforce the advisor’s role as a trusted investment professional rather than simply a product selector.
The Client Experience Is the Real Differentiator
Portfolio reviews become more engaging because discussions center on the client’s personal investment strategy rather than the performance of a generic mutual fund. Tax planning becomes integrated into investment management rather than treated as a separate conversation. Clients begin to recognize that their portfolio reflects their unique objectives. That personalization strengthens relationships and increases client loyalty.
In an increasingly competitive advisory landscape, experience may prove to be as important as investment performance.
The Holy Grail: Personalization at Scale
Perhaps the most exciting development is the convergence of SMAs with artificial intelligence and data analytics. AI helps advisors analyze portfolios more efficiently, identify tax opportunities, monitor risk exposures, and generate personalized investment insights.
Combined with direct indexing and sophisticated portfolio management technology, SMAs are becoming the foundation for highly customized investment experiences delivered efficiently across an advisor’s entire client base.
Looking Ahead
Industry research continues to point toward growing adoption of managed accounts, particularly among registered investment advisors serving affluent households. As technology lowers barriers and client expectations continue to evolve, the trend toward personalization is likely to accelerate rather than slow.
The advisors who thrive in the coming decade may not necessarily be those who identify the next outperforming fund. Instead, they will be those who combine investment expertise with tax awareness, technology, behavioral coaching, and highly customized portfolio construction.
SMAs sit at the intersection of all four.
The Advisor Opportunity
Markets will always fluctuate. Investment products will continue to evolve. Technology will continue to improve. What remains constant is the value clients place on advice that is personalized, proactive, and aligned with their goals.
Separately Managed Accounts enable advisors to move beyond product selection and toward true portfolio personalization. They enhance tax efficiency, improve transparency, support more meaningful client conversations, and reinforce the advisor’s role as a fiduciary and strategic partner.
As client expectations continue to rise, personalization is becoming one of the defining competitive advantages in wealth management.
For advisors looking to strengthen client relationships while delivering more customized investment solutions, SMAs are not simply another portfolio option—they are an important step toward the future of investment management.
Ryan Nauman is the Market Strategist at Zephyr, which helps investment professionals make more informed investment decisions on behalf of their clients. Connect with Ryan on LinkedIn.