A quiet revolution is underway in the highest echelons of corporate governance, where a single financial institution’s technological leap challenges a decades-long power structure. JPMorgan Chase, a titan of global finance, is deliberately moving to sideline the very firms that have guided corporate voting for generations. This strategic pivot is not merely a change in vendors; it is a fundamental shift powered by artificial intelligence, questioning the very necessity of the traditional proxy advisory model and signaling a new era of in-house, data-driven decision-making for institutional investors.
The implications of this move extend far beyond one bank’s operational choices. It strikes at the heart of how corporate accountability is enforced, influencing trillions of dollars in shareholder value. At stake is the future of an industry dominated by a powerful duopoly and the balance of power between asset managers, corporate boards, and the third-party arbiters who have long held sway over them. JPMorgan’s gambit could either be an isolated act of defiance or the first domino to fall in a complete restructuring of shareholder democracy.
When a Financial Giant Builds Its Own Crystal Ball
For decades, the ritual of corporate voting has been guided by a handful of influential outside voices. JPMorgan Chase is now ending that tradition. The bank’s asset management arm, overseeing more than $3 trillion, has completed its transition away from external proxy advisory firms for all its U.S. voting activities. This decisive break from industry norms represents a direct challenge to the established order, where even the largest investors have historically relied on third-party analysis to navigate thousands of complex shareholder proposals each year.
The instrument of this disruption is a proprietary AI tool named “Proxy IQ.” Integrated into the firm’s massive Spectrum investment platform, this system is designed to render external advice obsolete. By harnessing advanced AI, the firm asserts it no longer needs third-party data collection or voting recommendations for its U.S. portfolios. Instead of looking outward for guidance, JPMorgan is turning inward, betting that its own technology and data can produce a more refined and defensible voting strategy.
The Long Reign of Corporate America’s Gatekeepers
Proxy advisors have long served as the indispensable gatekeepers of corporate America, wielding immense influence over shareholder votes on critical issues ranging from executive pay and board appointments to environmental policy and corporate strategy. For institutional investors managing countless positions, outsourcing the deep research required for each vote has been a matter of efficiency and necessity. The recommendations from these firms often determine the outcome of contentious shareholder meetings, shaping the future of the world’s largest companies.
This influence is concentrated in the hands of two dominant firms: Institutional Shareholder Services (ISS) and Glass Lewis. Together, they control an estimated 97% of the proxy advisory market, creating a powerful duopoly whose guidance is followed by a significant portion of institutional investors. Their reports and voting recommendations carry enormous weight, creating a standardized framework for corporate governance that has been both praised for enforcing accountability and criticized for its one-size-fits-all approach.
Deconstructing JPMorgan’s Strategic Pivot
JPMorgan’s move to fully internalize its U.S. voting process marks a landmark decision in the asset management industry. With the transition to its in-house system now complete, the firm is the first major investment manager to entirely eliminate reliance on external proxy advisors for its domestic voting. The bank frames this technological independence as the ultimate fulfillment of its fiduciary duty to clients.
At the core of this strategy is Proxy IQ’s ability to leverage JPMorgan’s vast reservoir of proprietary data. The AI analyzes information gathered from the more than 3,000 corporate engagements the firm conducts annually, creating a unique “information advantage.” According to a memo sent to clients, this allows for a voting process based solely on the firm’s own research and direct interactions with corporate management. The message is clear: JPMorgan believes its own data, interpreted by its own AI, provides a more nuanced and client-aligned basis for decision-making than any external report could offer.
A Calculated Move in a Politically Charged Arena
This strategic pivot is the culmination of years of vocal criticism from JPMorgan Chase CEO Jamie Dimon, who has frequently lamented the “undue influence” wielded by proxy advisory firms. In his 2024 letter to shareholders, Dimon foreshadowed the move, announcing plans to decrease the influence of third-party advisors and increase the direct involvement of portfolio managers in the voting process. This decision, therefore, is not an abrupt reaction but a calculated step in a long-held corporate strategy to reclaim control over its governance decisions.
The timing of this break is also significant, occurring amidst a fiercely politicized battle over corporate social responsibility. ISS and Glass Lewis have faced intense pressure from critics who accuse them of using their market power to advance “radical politically-motivated agendas,” particularly around environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) initiatives. A December executive order signed by President Donald Trump targeted the firms directly, ordering federal agencies to review regulations related to their influence on corporate policy.
This conflict has also escalated at the state level. Officials in Texas, Florida, and Mississippi have launched investigations into the ESG and DEI policies promoted by the advisory giants. While a Texas law targeting the firms was temporarily halted by a federal judge, the legal and political scrutiny continues unabated. JPMorgan’s decision to go it alone provides it with a shield in this contentious environment, allowing it to base its votes on its own financial analysis rather than on recommendations that are increasingly under political fire.
The Blueprint for a Post-Advisor World
JPMorgan’s bold move has set a powerful precedent, raising the critical question of whether other major asset managers will follow its lead. The immense investment required to build a proprietary AI system like Proxy IQ may be a barrier for smaller firms. However, for other financial giants, developing in-house solutions could become a new competitive imperative, potentially triggering a domino effect that erodes the market share of ISS and Glass Lewis. This could force the advisory firms to adapt, perhaps by unbundling their data services from their voting recommendations or by offering more customized solutions.
The shift from a centralized, human-led advisory model to a decentralized, tech-driven approach has fundamentally altered the power dynamics of corporate governance. It represented a technological and philosophical break from decades of established practice, moving the locus of decision-making power from a few external arbiters back to the asset managers themselves. This change signaled not just a loss of business for the incumbent advisors but a potential paradigm shift in how shareholder democracy functions, with implications for corporate accountability and investor influence for years to come.
