KPMG sells off pensions advisory arm

KPMG has completed the sale of its former pensions advisory practice, marking one of the first major steps by a Big Four firm to separate out non-audit work

The venture is backed by private equity firm Exponent, which is believed to have paid some £200m, and KPMG UK’s current pensions partners.

The move was first announced at the end of last year, when the firm said all 20 partners and circa 500 staff currently employed in KPMG’s UK pensions practice would transfer to a new company to be headed up by Andrew Coles, UK head of pensions at KPMG.

That process is now complete and the new company, Isio, has launched as an independent UK pensions advisory firm.

It combines actuarial expertise, third party administration, investment consulting and defined contribution specialisms.

Isio advises more than 1,000 clients, ranging from mid-sized companies to FTSE 100 organisations, on the management of pensions worth over £90bn.

The former KPMG team will be located across eight regional bubs, with Coles appointed CEO. Roger Siddle, an experienced private equity portfolio chairman with a background in professional services leadership, has been name chairman of the new company.

Coles, Isio CEO, said: ‘As an independent practice we can predict and respond to client opportunities and challenges with greater agility. Backed by proprietary technology, our team brings deep technical expertise and an entrepreneurial culture.

‘The industry is at a turning point and our belief is that pensions advice needs to adapt to the new world, with technology playing a key part in improving the member experience, the quality of data and the modelling of pension outcomes.’

Bill Michael, chairman of KPMG, said: ‘We have been proud to have such a strong pensions business here in the UK, but we recognise that Exponent are now the right partners to support Isio’s long-term growth strategy.

‘The transaction will allow us to continue our programme of investment in the core audit, tax, deal and consulting services offered to our clients.’

Last week the Financial Reporting Council (FRC) said it had written to the UK’s largest audit firms setting out the regulator’s expectations for operational separation to bring about audit quality improvements and audit market resilience.

Claire Lindridge, the FRC’s director of audit firm monitoring and supervision (AFMAS) said: ‘The FRC’s focus is to ensure audit firms put audit quality front and centre, with new independence and financial transparency guidelines to support this.

‘We expect the firms to put in place independent governance for the audit practice and ensure that the audit practice Is appropriately ring fenced from the rest of the firm so that financial results are clear and transparent.’

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