JPMorgan’s asset and wealth management division is ditching its long-held practice of using external proxy advisors for advice on shareholder voting decisions.
The bank said it was “the first major investment firm to fully eliminate any reliance on external proxy advisors for our U.S. voting process,” according to an excerpt from an internal memo seen by Business Insider.
The changes to the US proxy-voting process will take full effect on April 1, following a transition period in the first quarter of the year, a spokesperson for JPMorgan Asset Management told Business Insider.
The news was first reported by The Wall Street Journal.
JPMorgan’s asset management division holds $7 trillion in client assets, giving it a vote in thousands of shareholder decisions that include general governance decisions outside of finance questions. It’s common practice in the industry to turn to proxy advisory firms for data collection, advice, and voting recommendations.
The practice has come under fire from the Trump administration, which signed an executive order in December calling for increased oversight of the proxy advisor industry.
“Proxy advisors regularly use their substantial power to advance and prioritize radical politically-motivated agendas,” the executive order said.
The move away from proxy firms reinforced JPMorgan’s “unwavering commitment to vote solely in clients’ best interests, using our information advantage,” the bank said in the memo.
In place of external human advisors, the asset and wealth management unit is launching an in-house AI platform, called Proxy IQ, to support shareholder decisions, according to the memo.
“Proxy IQ extends the high bar of independent analysis that our portfolio managers, research analysts and stewardship teams have always applied to every vote, using that same in-house expertise to cover all aspects of the voting process, including data and research selection, down to the smallest detail,” JPMorgan said in the memo.
The tool will be able to aggregate and analyze proprietary data from more than 3,000 annual company meetings, it said.
JPMorgan has a technology budget of $18 billion, and CEO Jamie Dimon has previously said he’s out to win the AI arms race.
Institutional Shareholder Services (ISS) and Glass Lewis, two proxy advisory firms previously used by JPMorgan and named in the Trump administration’s December executive order, did not respond to Business Insider’s request for comment.