Conservatives have alleged political bias in how proxy agents advise fund managers to vote their shares.
Wells Fargo, America’s fourth largest bank, followed JPMorgan in cutting ties with third-party proxy agents, who advise fund managers how to vote at corporate shareholder meetings.
This proxy advisory business has been largely controlled by two companies—Institutional Shareholder Services (ISS) and Glass Lewis—which together comprise more than 90 percent of the market. These firms have come under criticism in recent years from conservatives who allege that the advisers have been leveraging their dominant role in shareholder voting to push a left-wing agenda on issues including climate and social justice.
“Wells Fargo’s decision, especially coming right after JPMorgan’s, is a major signal that large institutions are no longer comfortable outsourcing fiduciary voting responsibility to proxy advisers,” Tim Schwarzenberger, portfolio manager for Inspire Investing, told The Epoch Times. “ISS and Glass Lewis have held outsized influence for years, often driving political and social agendas far beyond long-term shareholder value.”
On Jan. 28, Wells Fargo Wealth & Investment Management announced the launch of its own proprietary proxy voting service for clients to vote on corporate shares that they invest in.
“We recognize the vital role our clients play in the companies they invest in,” said Darrell Cronk, chief investment officer of Wealth & Investment Management. “Offering an in-house proxy voting service allows us to take more direct responsibility for our proxy voting approach.”
Several weeks ago, JPMorgan also ended its relationship with ISS and Glass Lewis, bringing its proxy advisory services in house as well.
In his 2024 letter to shareholders, JPMorgan CEO Jamie Dimon, criticized “misguided proxy advisors,” saying they were among the reasons fewer U.S. companies wanted to list on public exchanges.
Many asset managers have recently sought to depoliticize their roles as corporate shareholders. In the past year, a flood of banks and asset managers have quit activist U.N.-sponsored climate clubs including the Net Zero Banking Alliance and the Net Zero Asset Managers initiative.
These moves come amid threats of boycotts and investigations from conservative attorneys general and state treasurers.
