A Separate Account is a professionally managed portfolio of individual securities. Generally, it is an investment consulting relationship in which a client's money is placed with one or more money managers, and all administrative and management fees, along with commissions, are wrapped into one comprehensive fee, which are often paid quarterly. The fee varies but is often 1% - 3% of the assets. An average minimum investment is usually $25,000. From the client's perspective, they have access to top investment managers that they wouldn't have been able to invest with alone, since there can be a $1 million dollar minimum to be a high net-worth client of these top managers.
Big differences in relation to mutual funds include the fact that securities are directly owned by investors and individual customizations can be made for, say, economical preferences or tax efficiency.