In a landmark move for the financial industry, JPMorgan Chase & Co. has severed all connections with external proxy advisory firms. The bank's massive asset and wealth management division, which handles over $7 trillion in client assets, will now rely exclusively on its own artificial intelligence-powered system to cast shareholder votes.
The AI-Powered Alternative: Proxy IQ
According to an internal memo seen by The Wall Street Journal, the bank will deploy a new internal platform named Proxy IQ starting this coming proxy season. This AI-driven system is designed to manage the complex task of voting shares across thousands of companies where JPMorgan holds stakes.
The platform's artificial intelligence will analyze data from more than 3,000 annual company meetings. It will then provide recommendations directly to the bank's portfolio managers. This function directly replaces the core service traditionally offered by external proxy advisers like Glass Lewis and Institutional Shareholder Services (ISS).
Industry First and Executive Criticism
JPMorgan believes it is the first major investment firm to completely stop using these external advisers, which form a critical part of the investment industry's infrastructure. The memo noted the bank had previously decided to stop using advisers for vote recommendations, depending on its internal stewardship team. This latest move cuts ties entirely, including for voting infrastructure.
The decision amplifies pressure on the proxy advisory industry, which has recently faced scrutiny from the Trump administration. In December, an executive order called for securities and antitrust regulators to investigate these firms.
JPMorgan's CEO, Jamie Dimon, has been one of the most vocal critics. At an industry event last spring, he famously labeled proxy advisers as "incompetent" and declared they "should be gone and dead, done with." Critics, including many corporate CEOs, argue that firms like ISS and Glass Lewis hold undue influence over shareholder votes and operate with business models that create conflicts of interest.
Industry Reaction and Shifting Landscape
The proxy advisory market is largely a duopoly between ISS and Glass Lewis. While large investment managers like JPMorgan have the resources to build dedicated internal teams, smaller firms often depend heavily on these advisers for research and voting services.
In response to the growing criticism, the industry is already adapting. ISS stated last month that it does not dictate corporate-governance standards and that its sophisticated clients make their own decisions. Meanwhile, Glass Lewis recently announced it would stop offering its broad "benchmark" voting recommendations to clients starting in 2027. Instead, it plans to focus on providing more tailored advice to individual investment firms.
JPMorgan's decisive shift to an AI-powered, in-house system marks a significant evolution in how institutional shareholders engage with corporate governance. It sets a potential precedent for other large asset managers and could reshape the multi-billion dollar proxy advisory industry.
