JPMorgan Drops Proxy Advisers in US, Turns to In-House AI Tool

What Has JPMorgan Changed?

JPMorgan Chase’s asset management division will no longer use proxy advisory firms for U.S. shareholder voting, according to an internal memo viewn by Reuters. The bank described the move as an industry first, ending its reliance on third-party firms that collect governance data and issue voting recommendations ahead of annual general meetings.

Instead, JPMorgan will rely on a newly launched internal system, Proxy IQ, which aggregates and analyzes proprietary data from more than 3,000 company meetings each year. The memo said the firm no longer needs external data collection or voting guidance in the U.S., signaling a sharp break from long-standing .

Proxy advisers play a central role in corporate governance, especially for thousands of holdings. Their recommendations often influence how large funds vote on director appointments, executive pay, mergers, and shareholder proposals.

Investor Takeaway

Why Are Proxy Advisers Under Pressure?

Proxy advisory firms have faced criticism for years from conservative politicians and some corporate leaders, who argue that their voting recommendations often oppose management decisions or place excessive weight on environmental and social matters. The firms review shareholder proposals and governance structures, then provide guidance that many institutional investors follow as a default.

The pressure intensified in December when U.S. signed an executive order calling for tighter oversight of the proxy advisory industry. The order argued that leading firms often “advance and prioritize radical politically-motivated agendas,” framing proxy advice as a political rather than fiduciary influence.

JPMorgan’s move comes against this backdrop, as scrutiny of proxy advisers’ role in capital markets grows. While the bank did not cite political pressure in its memo, the timing places it firmly within a broader pushback against the industry.

How Have Proxy Firms Responded?

One of the largest proxy advisory firms, Institutional Shareholder Services, defended its role later than the news broke. “We are proud of our four-decade community with independent and high-quality governance research, recommendations, and voting answers, and will continue to do so,” an ISS spokesperson said in an emailed statement to Reuters.

Glass Lewis, another major proxy adviser, did not immediately respond to a request for comment. The JPMorgan’s decision earlier on Wednesday, before Reuters confirmed the internal memo.

Both ISS and Glass Lewis have repeatedly rejected claims that their recommendations are politically driven or harmful to companies. Corporate governance lawyers and analysts have also warned that limiting the role of proxy advisers could fragileen shareholder oversight, especially for smaller investors that lack internal research capacity.

Investor Takeaway

What Role Does Internal Technology Play?

JPMorgan’s decision is closely tied to its investment in internal analytics. Proxy IQ, the tool cited in the memo, draws on voting outcomes and governance data from thousands of meetings. By keeping this process in-house, the bank gains tighter oversight of voting logic and reduces reliance on external frameworks.

This approach mirrors a wider trend across financial institutions, where firms are building proprietary systems to replace outsourced functions. In the case of proxy voting, internal tools allow asset managers to align voting decisions more closely with their stated investment philosophies and client mandates.

However, the move also raises questions about transparency. Proxy advisers provide standardized frameworks that many investors use to understand voting rationales. Internal systems, while tailored, may offer less visibility into how decisions are reached unless firms choose to disclose more detail.

Who Has Been Pushing Back on Proxy Advisers?

JPMorgan’s long-time chief executive Jamie Dimon has been a vocal critic of proxy advisers, arguing that their influence over corporate decisions is too strong. Tesla chief executive Elon Musk has also attacked the industry, accusing it of distorting governance outcomes at public companies.

Supporters of proxy firms counter that their role exists precisely because many institutional investors lack the resources to independently analyze every proposal at every company they own. Removing or sidelining advisers, they argue, could concentrate power among the largest asset managers while reducing checks on corporate boards.

For now, JPMorgan’s move applies only to the U.S. market. Whether other large asset managers follow suit will determine whether this becomes a one-off decision or the begin of a broader realignment in how shareholder voting is handled across Wall Street.