U.K. investment consulting firm Redington is “key” to Arthur J. Gallagher & Co. becoming “a global force in investment consulting,” said David Piltz, head of Gallagher’s U.K. employee benefits and HR consulting operations.
Late in October, Gallagher — an insurance brokerage, risk management and consulting services firm headquartered in Rolling Meadows, Ill. — said it would acquire Redington for an undisclosed sum.
Piltz highlighted talent in investment research, modeling, sustainability and technology — which he said were of “global expertise” — at Redington as making it “very clear that, over time, this can help us globally become the premier investment consulting firm in the world. We really are very excited about this opportunity,” he said.
Redington, which launched into the U.K. investment consulting arena in 2006 at a time when global consulting giants dominated the pension fund landscape, is known for being different to competitors. Its approach to investment consulting focuses on risk management, not just plain assets and liabilities, and the brains behind the brand are investment bankers turned entrepreneurs who were part of the team that put in place a liability-driven investing program that changed U.K. pension funds forever in 2003, with the Friends Provident pension fund. Founders Robert Gardner and Dawid Konotey-Ahulu now tread different paths, with Gardner co-founding and leading nature-focused investor Rebalance Earth, and Konotey-Ahulu with several roles including as co-founder of industry initiative 10,000 Black Interns.
The consultant is organized around three lines of business: defined benefit and defined contribution plan consulting; designing outcome-oriented solutions, funds and research for global endowments, foundations, private wealth and other institutional clients; and providing its fintech risk management tool, ADA, to pension funds and other investors. As of Dec. 31, 2023, just over 97% of its £33.9 million ($43 million) in revenue was garnered from U.K.-based clients, about 2% was derived from Europe-based clients, and the remainder from elsewhere in the world. Assets under advisement were over £600 billion as of end-2022. A spokesman did not provide up-to-date figures.
Under the deal with Gallagher, Redington CEO Sylvia Pozezanac and her team will remain based in London, reporting to Piltz.
Gallagher already has some U.K. investment consulting business — it acquired retirement, HR and employee benefits consultant Buck, operating in the U.S., Canada and U.K., in 2023. Piltz himself joined Gallagher as a result of that deal.
“When we brought our organization together in the U.K., and I joined the global leadership team for benefits, one of the key areas where we knew we needed to excel was investment consulting — both in the U.K. and globally,” he said.
The U.K. investment consulting business comprises about 50 people, he said. “But we want to be the very best,” Piltz said. And it wanted to be able to scale investment consulting on a global basis.
Once that realization had been made, “there was really only one name on the list,” Piltz said.
Innovative approach
Redington is a well-known investment consultant in the U.K. in particular, highlighted in institutional investor circles for its innovative approach. Recent hires for the firm include as strategic investment adviser to the £3.5 billion ($4.5 billion) Wiltshire Pension Fund, Trowbridge, England; advising the £31.6 billion local government investment pool London CIV on building a natural capital fund; and as investment adviser for the £700 million Cambridge University Assistants' Contributory Pension Scheme, Cambridge, England.
Private equity firm Phoenix Equity Partners bought a majority stake in Redington in 2020, which was then purchased by Gallagher.
“They came onto the market with a different approach to other, more traditional, consultancies,” a pension fund trustee, who spoke on condition of anonymity, said of Redington.
Gardner and Konotey-Ahulu’s experience in bonds as ex- bankers at Merrill Lynch was key since pension funds were, at that time, looking to increase bond allocations. The two also introduced a “banking thought process, which no one else (was) doing,” the trustee said.
“They remain in a sweet spot where the thought is that they remain different, and long may that continue. It would be a real shame if they move to being just another consultancy doing the same thing as everyone else,” he added.
While Redington had a “terrific partnership” with Phoenix, Pozezanac recognizes the temporary nature of that capital and backing.
“People come in for a reason, a season, and you go on that journey for a bit with them, and then you go on the next bit of your journey with someone else. It’s not an ‘if,’ it’s a ‘when,’ when you choose to partner with private equity capital,” she said in the same interview.
That applies to clients, too. “Our clients have been thrilled as well,” Pozezanac said of the Gallagher deal. “When you are private equity-held, and we’ve always been very, very open about our ownership, there’s always a question from clients of ‘what comes next?’”
After four and a half years with Phoenix, the board and executive leadership at Redington decided to look elsewhere for backing.
“We’ve always had … very clear strategic growth plans for the organization,” and the strategy has “always been to continue growing globally,” Pozezanac said. The firm’s mission, she said, is “to make 100 million people financially secure — and there aren’t 100 million people in the U.K.! We’ve always had an ambition to have a global footprint.”
For those long-term ambitions, Redington needed a “partner with a long-term vision and capital (as) the place for us to go … Permanent (capital) was important for us because of our strategy,” she said.
And Gallagher also ticked a box in that being a large, global provider, it has an operational footprint in place. “The ability now to reach a much larger audience much more easily, from a distribution and operational perspective, is absolutely fantastic,” Pozezanac said. The deal gives Redington the “ability to instantaneously have access to a larger group of clients than we could attract on our own.”
U.S. focus
While Redington has been actively pursuing non-U.K. business for several years, brand recognition has not been there.
“It’s difficult to have a global ambition and agenda without North America, and especially” a U.S. focus, Pozezanac added. “The Gallagher organization is magnificently strong in North America. When you start with a strong brand, a very respected brand, it makes it easier for (a company) to enter a new marketplace. Redington is well-known in the U.K., but once you leave the U.K. … we do not have the brand reputation,” she said. “Gallagher does.”
And while Redington is particularly well-known in the U.K. for its expertise in liability-driven investing — its first service offering, Pozezanac said — and interest-rate hedging for defined benefit funds, it’s the investment advice side of things that are expected to resonate with international clients.
For example, what a portfolio looks like, using fixed-income instruments, synthetic or physical exposure — “those decisions are very portable,” she said. “Investment skills are investment skills.”
The same portability applies to the firm’s research capabilities — picking managers to run certain strategies, for example. “Whether that’s held in a DB or DC vehicle is irrelevant. A lot of what Redington does is legal-vehicle agnostic.”
Whether you “do DB work for a client in the U.K., Germany, the U.S. — once you understand the business objectives (and local laws), our skills are geographically agnostic,” Pozezanac said.
It may also help Redington to extend its operations with existing clients that are multinational. “Most have a global footprint — a U.K. HQ with a U.S. subsidiary, or a U.S. HQ and we work with the U.K. subsidiary,” Pozezanac said.
That global footprint is also powerful for talent retention, she added.
“We have young, ambitious people who are brilliant at what they do — to the extent that they would like the opportunity to have a global assignment, or broader opportunities for their career. We’re part of a much larger organization to provide those opportunities,” Pozezanac said.
Now the deal is done, Piltz and Pozezanac are “working hard to make everyone feel part of this journey,” Piltz said. “We want the team to feel like my legacy Buck colleagues — bringing together and creating something new and fresh,” he said.
“I joined the company that is Buck in 1996 — I would say, ‘cut me in half, it says Buck.’ But I can honestly say I was so proud to retire the Buck brand in July, as we did it for the right reasons. Culturally, we’re aligned,” Piltz added.
