Asset manager’s $7tn arm severs ties with ISS and Glass Lewis to deploy proprietary ‘Proxy IQ’ system
JPMorgan Chase’s asset management division has abandoned the two dominant proxy advisory firms in favour of a proprietary artificial intelligence system, in a move that threatens to upend the corporate governance industry and reshape how the world’s largest investors cast shareholder votes.
The $7tn asset manager will immediately cease using recommendations from Institutional Shareholder Services and Glass Lewis, replacing them with “Proxy IQ”, an AI-driven platform designed to analyse voting decisions across more than 3,000 annual company meetings, according to an internal memo seen by the Financial Times.
The decision represents the most significant challenge yet to the proxy advisory duopoly, which for decades has provided the research infrastructure underpinning votes on everything from executive remuneration to climate proposals at publicly traded companies.
“We are closing the gap between our fiduciary duty and the mechanical reliance on outsourced data,” a JPMorgan spokesperson said. “Proxy IQ allows our stewardship team to scale their insights without filtering them through a third-party lens.”
A calculated rebellion
The timing of JPMorgan’s withdrawal is politically charged. Last month, the Trump administration issued an executive order directing securities regulators and antitrust authorities to scrutinise proxy advisers’ influence, specifically targeting their role in environmental, social and governance voting.
Jamie Dimon, JPMorgan’s chief executive, has emerged as one of Wall Street’s most vocal critics of the advisory firms. In successive annual letters, he has characterised the outsourcing of voting decisions as a “bureaucratic compliance exercise” that grants the firms “undue influence” over American capitalism. At an industry conference last spring, he labelled them “incompetent” and questioned whether their business model should exist at all.
Industry executives acknowledge that Mr Dimon’s public campaign has emboldened others to reconsider their dependence on external advisers. “Jamie gave cover to people who privately shared the frustration but lacked the scale or courage to act,” said one senior governance professional at a rival asset manager who requested anonymity.
How Proxy IQ works
The system ingests regulatory filings, annual reports and securities disclosures to generate voting recommendations aligned with JPMorgan’s stewardship principles. Unlike the standardised benchmarks provided by ISS and Glass Lewis, Proxy IQ produces bespoke analysis for each portfolio manager, who retains final authority over how votes are cast.
Sarah Collins, a governance analyst at Morningstar, argues the technology addresses legitimate concerns about the proxy firms’ methodologies. “The AI does the heavy lifting on data extraction — identifying compensation anomalies, board attendance records, dilution risks — but it strips away the black box of proprietary scoring systems that companies and investors have long complained about.”
Yet the shift raises questions about governance fragmentation. Without the common baseline that proxy advisers provide, companies may face a more unpredictable array of voting outcomes, particularly in contested elections. “You lose the co-ordinating function that these firms perform, whether you like their recommendations or not,” said one corporate secretary at a Fortune 500 company.
Industry under pressure
The proxy advisory sector is confronting multiple threats simultaneously. Glass Lewis recently announced it would discontinue its standard voting benchmarks by 2027, pivoting instead to customised client services — a tacit acknowledgment that the one-size-fits-all model is increasingly untenable.
ISS, owned by Deutsche Börse and commanding roughly two-thirds of the market, now faces the prospect of losing its most prestigious client. Neither firm commented on JPMorgan’s decision.
BlackRock and State Street, the other members of the “Big Three” asset managers controlling more than $20tn combined, have introduced programmes allowing institutional clients greater input on voting decisions. But neither has fully internalised the mechanics of vote execution as JPMorgan has done.
If Proxy IQ functions smoothly during the 2026 proxy season, rivals are likely to follow suit. “The cost savings alone make this inevitable,” said one asset management executive. “The question is whether the technology is mature enough to handle edge cases — poison pills, contested M&A, dissident slates.”
Market implications
JPMorgan shares rose 0.8 per cent to $258.42 on Wednesday, outperforming the broader S&P 500, which closed flat at 6,105. Investors appeared to welcome both the potential cost reductions and the assertion of autonomy over voting decisions.
For companies facing shareholder proposals, JPMorgan’s move introduces fresh uncertainty. Historically, management teams could anticipate ISS positions weeks in advance and tailor their disclosures accordingly. That predictability may now fracture, as different asset managers deploy competing analytical frameworks.
Activists, meanwhile, face a more complex landscape. Proxy fights succeed or fail based on vote projections derived largely from anticipated ISS recommendations. “You’re going to see campaigns get more expensive and less predictable,” said one adviser to dissident shareholders. “The old playbook assumed ISS set the tone. That’s gone.”
What it means
For retail investors holding JPMorgan-managed funds, votes will now reflect the bank’s proprietary analysis rather than a blend of internal judgment and third-party guidance. The bank insists portfolio managers — not algorithms — make final decisions, though the system is designed to accelerate and enhance that process.
The broader implication is a recentralisation of power. For 25 years, proxy advisers functioned as a de facto fourth branch of corporate governance, alongside management, boards and shareholders. JPMorgan’s defection suggests that in an era of sophisticated AI, the world’s largest investors no longer see value in ceding that authority to external intermediaries.
Whether this improves or degrades governance outcomes remains an open question. What is certain is that the balance of power has shifted decisively.