J.P. Morgan Asset & Wealth Management, one of the largest global investment managers, has announced it will stop using third‑party proxy advisory firms for U.S. proxy voting and will instead rely on a newly launched internal, AI‑powered platform, Proxy IQ, to manage all aspects of the voting process for more than 3,000 company annual meetings.
The move by J.P. Morgan comes amid intensified regulatory and political scrutiny of proxy advisors in the United States, including a recent executive order by President Donald Trump directing multiple federal agencies to increase oversight of proxy advisory firms and to investigate potential violations of antitrust, unfair competition, and deceptive practices laws. The order singles out the market concentration of the two leading firms (ISS and Glass Lewis), together accounting for over 90% of the market, and asserts they have used their influence to advance “politically‑motivated agendas,” including on ESG and DEI issues.
The executive action follows lawsuits and investigations initiated by Florida and Texas, alongside a stated intent by SEC Chair Paul Atkins to examine the role of proxy advisors and address the “weaponization of shareholder proposals by politicized shareholder activists.”
J.P. Morgan appears to be the first major investment firm to cut ties with U.S. proxy advisors in favor of an internal AI platform. This shift by J.P. Morgan signals a notable inflection point for the proxy advisory industry, catalyzed by both AI technological capability and the regulatory‑political headwinds facing proxy advisory firms. If other investors follow suit, the market for standardized voting recommendations could shrink significantly.
This shift and the heightened regulatory and political scrutiny around proxy advisors could also push these firms to more customized voting recommendations. Notably, Glass Lewis has already announced significant changes to its delivery of research and voting recommendations, including a plan to stop providing singular voting advice, citing increasing divergence between U.S. and European investor expectations on matters such as sustainability and corporate engagement.
A transition to more individualized voting recommendations will also have an impact on issuers. As investors move away from standardized voting recommendations, issuers should expect more bespoke voting rationales (based on each firm’s differentiated data, risk models, and policy priorities) and greater variance in voting outcomes across their top holders. These changes will also necessitate changes to how issuers approach investor engagement, which will also need to become more individualized.
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