McMahon was most recently UK chief executive of platform provider FNZ but left the role in March 2013 after less than a year. Prior to FNZ he was group marketing director at Aegon.
He will report into Cofunds chief executive David Hobbs.
Hobbs says: “We have big plans for this business, and having his knowledge and drive at the top table will be invaluable.”
McMahon adds: “I’m excited to have been asked to work with David and his team to help plan for the next stage of its evolution within the Legal & General Group.”