SMA’s were developed in the 1970’s to accommodate accounts and clients who needed to meet specific objectives, which did not fit within the constrictions of a mutual fund investment. It is the freedom of choice of professional managers, portfolio customization, objective investment advice for a set fee, diversification (or concentration should the client choose) tax efficiency and general flexibility that have made separate accounts popular among informed investors.
However, there is some question as to whether separate accounts actually provide significant advantages in terms of risk/return over more typical portfolios. There is no clear answer, and without comprehensive data and benchmarks to test against, any evidence is largely anecdotal. (The same is largely true of hedge funds.)
SMA's also enjoy some popularity among wealthier investors as they are seen as exclusive, and offer investment options not available to those of more modest means. As noted though, whether these options actually result in a better risk/return profile is unclear.