The rise of separately managed accounts (SMAs) is reshaping the financial services industry, shifting brokers from commission-driven sales to fee-based consulting focused on long-term client relationships. However, this transformation remains incomplete, as many advisors misuse SMAs, treating them like expensive mutual funds rather than customizing portfolios for individual needs. 

Despite SMAs' advantages, such as tax-loss harvesting and tailored asset allocation, few brokers fully leverage these features, with customization rates alarmingly low. A significant hurdle is inadequate diversification, especially as lower account minimums make it difficult to properly spread investments across multiple managers and styles. 

To address these challenges, brokers need better training, more robust technology platforms, and a commitment to understanding both their clients and their investment managers. 

Finsum: Ultimately, success with SMAs requires not just offering the product, but delivering ongoing service, customization, and disciplined portfolio management—a shift that, while slow, seems inevitable