According to this WSJ article, J.P. Morgan Asset Management has stopped using proxy advisors – which is believed to be the first time an institutional investor hasn’t used ISS or Glass Lewis as part of its proxy voting analytical process in a long time. Instead, J.P. Morgan Asset Management will use its own internal AI-powered platform to help decide how to vote its proxies.
It is not unusual for large institutional investors to tailor – or override – proxy voting recommendations. Investors routinely incorporate their own voting policies and internal judgment rather than simply adopting ISS or Glass Lewis positions. What is unusual is for a major asset manager to entirely stop using third-party recommendations and research.
Also note that J.P. Morgan Asset Management might still be using proxy advisor recommendations for non-U.S. securities as the article only references voting in the US only. The proxy advisor market is broader internationally than in the US, where ISS and Glass Lewis are the predominant providers.
Here’s an excerpt from the article: “JP Morgan Chase’s asset-management unit is cutting all ties with proxy-advisory firms effective immediately, amping up the pressure on an industry that recently has come into the Trump administration’s crosshairs.
The unit, among the world’s largest investment firms with more than $7 trillion in client assets, has to vote shares in thousands of companies. This coming proxy season, it will start using an internal artificial-intelligence-powered platform it is calling Proxy IQ to assist on U.S. company votes, according to a memo seen by The Wall Street Journal.
The bank will use the platform to manage the votes and the AI also will analyze data from more than 3,000 annual company meetings and provide recommendations to the portfolio managers, the memo said, replacing the typical roles of proxy advisers.
JPMorgan thinks it is the first large investment firm to entirely stop using external proxy advisers, which provide much of the industry’s plumbing, the memo said. It previously had said it would stop using advisers for vote recommendations, relying on its in-house stewardship team instead.”
Authored by
Broc Romanek