JPMorgan Chase’s asset-management arm has cut ties with proxy advisory firms, opting to use AI technology internally for shareholder voting. The decision, effective immediately, comes amid increased regulatory scrutiny of the proxy advisory sector. Managing over $7tn in assets, JPMorgan must cast votes at thousands of shareholder meetings annually.

For this proxy season, JPMorgan’s asset-management unit will utilize an internally developed AI platform called Proxy IQ to assist with managing and analyzing voting at US companies. Proxy IQ will handle vote management and data analysis from over 3,000 annual meetings, providing recommendations for portfolio managers.

JPMorgan is the first major investment firm to completely eliminate its use of external proxy advisers, shifting to rely solely on its internal stewardship team and technology. This move follows a previous indication to discontinue using such advisers for recommendations.

Proxy advisory firms like Institutional Shareholder Services (ISS) and Glass Lewis help investment institutions navigate proxy voting complexities. In response to regulatory developments, ISS clarified that clients retain full discretion over their decisions, and Glass Lewis announced plans to tailor advice to individual clients by 2027.

JPMorgan CEO Jamie Dimon has criticized the industry, calling proxy advisers “incompetent.” A Trump administration executive order in December called for a review of proxy adviser practices. ISS emphasized that it does not set corporate governance standards, and clients have autonomy over their decisions.

Read more at Yahoo Finance: JPMorgan ends ties with proxy advisers and turns to AI