The “Big Two” proxy advisors are losing their grip on Wall Street’s biggest voting blocks.
Wells Fargo’s Wealth & Investment Management unit ($2.5 trillion AUM) announced Wednesday it is launching an internal proxy voting service, effectively severing ties with ISS (Institutional Shareholder Services). The move aligns the bank with a growing trend of major asset managers taking voting control back in-house to focus strictly on “long-term economic interests.”
✂️ THE SHIFT:
- The Partner: Wells Fargo is expanding its relationship with fintech giant Broadridge Financial Solutions to build the custom infrastructure.
- The Goal: To streamline the process and reduce reliance on third parties often criticized for prioritizing climate and social agendas over shareholder value.
- The Trend: This follows JPMorgan’s announcement earlier this month that it would also stop using proxy advisors in the US.
🏛️ THE POLITICAL PRESSURE: The decision comes in the wake of intense scrutiny on the proxy advisory industry.
- Executive Order: In December, President Trump signed an order to increase oversight of proxy firms, citing the need to curb “radical politically-motivated agendas.”
- The Argument: Conservatives and fund managers have argued that the duopoly (ISS/Glass Lewis) exercises too much influence over corporate boardrooms, often pushing non-financial ESG goals.
💡 ANALYST TAKEAWAY: For years, big banks outsourced their voting logic to ISS and Glass Lewis for efficiency. Now, that efficiency has become a political liability. By bringing the vote in-house, Wells Fargo is reasserting Fiduciary Sovereignty. They are signaling to clients (and regulators) that every vote cast is determined by their own economic calculus, not by an external scorecard. The era of “auto-voting” based on third-party recommendations is ending.
👇 Governance Pros: Will insourcing proxy voting actually change voting outcomes, or is this just a compliance shield against political heat?