The ID-SMA Is No Longer A Concept — It Is A Robust Structure

For a few years, the insurance-dedicated separately managed account (ID-SMA) was a structure that many advisors had heard about but few had utilized. The compliance infrastructure was nascent, the advisor universe was thin, and the operational requirements of running a discretionary, insurance-dedicated separately managed account within a PPLI or PPVA contract were not trivial. That picture has changed materially. The ID-SMA market has reached an inflection point: the infrastructure exists, the advisor universe has grown, and the value proposition of actively managed alternative investment exposure inside a tax-deferred or tax-free insurance structure is no longer hypothetical. It is happening at scale for the kind of accounts it was always designed to serve large family offices, institutional RIAs, and UHNW clients whose portfolio complexity justifies a bespoke structure over a commingled IDF.

The conversation that matters now is not whether ID-SMAs work. It is about advisor selection, distribution and compliance.

The distribution landscape is still taking shape

Three distinct distribution channels are emerging for PPLI and PPVA structures incorporating ID-SMAs: broker-dealer platforms, independent RIA networks, and bank private banking and wealth management platforms. Each channel presents a different access model, a different compliance burden, and a different relationship between the insurance carrier, the ID-SMA manager, and the end client. Bank platforms, including some of the largest private banks in the country, are deliberately moving into this space, and their participation is reshaping what institutional-quality distribution for these products looks like. Independent RIAs (across the AUA spectrum) have already launched or are evaluating becoming ID-SMA advisors; ID-SMAs are becoming a core alternative investment allocation framework. And broker-dealer channels continue to evolve their approach as the products mature.

For IDF managers, the distribution question has competitive implications. The managers who are growing fastest in this market are not simply those with the best investment track record; they are those who have invested in the operational, compliance and relationship infrastructure required to be accessible through multiple distribution channels simultaneously. The fund manager that can work with a large bank platform, a multi-family office RIAs, and a direct family office relationship is structurally advantaged over one that serves only a single channel.

Regulatory attention has not gone away

The increased regulatory and congressional attention that the PPLI and PPVA market received in recent years has affected the market not by eliminating the product category, but by raising the compliance bar. Structures that are properly designed, appropriately diversified, and consistent with the investor control doctrine are as valid as ever. But the documentation, diligence and compliance disciplines that the market requires have become more demanding, and clients and advisors should take these issues into consideration with respect to existing ID-SMA programs, as well as when establishing new ones. 

Join me on September 9 in New York

Please join me on September 9, 2026, at Katten's 14th Annual Tax-Efficient Investing Forum 2026 for an exciting and informative afternoon, during which I will moderate panels of industry experts on topics ranging from ID-SMAs, IDF manager strategies (and new market entrants), tax and regulatory updates and distribution. This is the gathering where the people driving the market, managers, advisors, carriers and clients, compare notes and explore new business opportunities. I am especially looking forward to the panel “ID-SMAs — Beyond the Inflection Point — Investor and Advisor Opportunities,” featuring Ken Foley of Spearhead, Sam Petrucci of Neuberger Berman, Elise Michael of Katten and Doug Peterson of Prudential. Register here or contact Kristen Sidebottom at Katten with questions.