Retail SMAs on pace for $3.6 trillion by 2026

For a long time, the advisor's job was to pick the winner. Choose the mutual fund, identify the manager, build a portfolio that beats the benchmark. WealthManagement.com's report on separately managed accounts makes the case that the definition of value has moved: clients expect portfolios shaped around their own tax situations, financial goals, legacy plans and preferences, not simply market exposure.

The SMA is the vehicle that embodies the change. Once reserved mainly for ultra-high-net-worth investors, separately managed accounts now reach a wider market on cheaper technology, lower minimums and portfolio management platforms. Cerulli Associates projects retail SMA assets will reach roughly $3.6 trillion in 2026, up from $2.2 trillion three years earlier and against a base that was a fraction of that size ten years earlier.

The broader managed-account universe is much larger. Assets in SMAs, UMAs and related structures rose 19.8% to $13.7 trillion in 2024, according to Cerulli. The firm projects 12.3% annual growth toward $31.8 trillion by 2028. SMA programs posted an 18.3% five-year compound growth rate; UMA programs grew at 18.7%.

WealthManagement.com sets the trend in a longer arc. The 1980s emphasized individual stock selection. The 1990s brought mutual funds. The 2000s brought exchange-traded funds. Each took its turn as the default answer before giving way to the next. The SMA is next in line, a product whose value lies less in what it holds than in how it is managed.

Fee-based revenue tightens the case. WealthManagement.com reports the share of advisors earning at least 90% of revenue from fees is expected to reach 54% by 2026. That model and the SMA reinforce each other. An SMA is not a product sold once; it is an account that demands ongoing decisions about positions, taxes and constraints. The client pays for that management, and the advisor has something concrete to manage.

None of this makes performance irrelevant. But performance is increasingly a commodity story, while personalization is not. What justifies an ongoing fee is a portfolio that visibly bends around the person who owns it. Tax-efficient trades, holdings that respect legacy plans and statements that show decisions being made make that tangible. The SMA makes that judgment visible in a way a pooled fund cannot.

Cerulli's forecast is a bet that clients will keep paying for judgment as long as they can see it in the positions they own. The firms that make their judgment legible — in tax outcomes, in statements, in a portfolio that changes for one client — will be the ones still able to charge for it. The next decade of advice pricing gets settled in those details.