Separate Account

What is a 'Separate Account'

A separate account is a privately managed investment account owned by an investor seeking to manage a pool of individual assets. Separate accounts are typically opened through a brokerage or financial advisor. They may also be held at a bank or opened with an insurance company. 

BREAKING DOWN 'Separate Account'

Separate Managed Accounts

A separate account is commonly utilized by high net worth investors seeking to partner with a professional money manager. In private investment management these accounts are commonly referred to as separately managed accounts. Separately managed accounts are offered by brokerages and financial service providers such as Charles Schwab and Fidelity. A separately managed account is typically opened to focus on a single objective. In a separately managed account, investors can choose from a range of options available through their account provider. Brokerages partner with investment managers to offer investors targeted investment strategies for separate account assets. To manage assets to multiple strategies an investor would likely need to open multiple separate accounts. Funds in a separate account are not pooled with investments of other investors.

Examples of separately managed account offerings available through Charles Schwab can be found here. Charles Schwab has over 100 different investment strategies available for separate account management with offerings from over 45 asset managers. Fidelity is another leading brokerage firm with a separately managed account offering. The firm has a number of investment strategy offerings, including funds managed by Fidelity as well as other asset managers.

Minimum investment in a separately managed account is approximately $100,000 to $200,000. Investors should also closely review the fee structures of these accounts since they involve partnership with multiple firms.

Insurance Investment Products

Separate account management is also available to investors through an insurance company. Insurance companies have investment products such as variable annuities that can be kept separate from an individual’s general insurance investments. In the context of variable annuities, these are payments made to an insurance company for the purpose of investing in securities. Variable annuities usually have fixed payouts that begin at a specified future date making them good investment options for retirement savings.

Personal Separate Accounts

Individual investors will also find a wide range of individual accounts that can be opened and managed as a personal separate account. A brokerage trading account offers investors a flexible separate account. Many other separate accounts can be opened for various purposes including individual retirement accounts (IRAs), checking accounts, savings accounts and more.