Recent developments suggest that a new wave of recalibration of how the results of proxy advisory firms are produced, used, and regulated may be underway. Proxy advisors have been under scrutiny for more than a decade, with the Securities and Exchange Commission (SEC) publicly expressing concerns about their role in 2013, and attempts to regulate proxy advisors from 2020 to 2022 failed. In 2023, a lawsuit to reinstate the regulations failed, followed by a Texas law attempting to regulate advisors, which is still being litigated.
Most recently, a December 2025 executive order directing federal agencies to increase oversight of proxy voting advisors sparked a resurgence of activity. The SEC has privately revisited the issue, with directors publicly pointing out that proxy voting is a fiduciary function and should not be followed by third-party recommendations. Meanwhile, Institutional Shareholder Services (ISS) and Glass Lewis (GL) are repositioning their services toward research and customizable analysis rather than a single standardized voting recommendation. Perhaps most importantly, in early January 2026, JPMorgan Asset Management will retire its use of ISS/GL and begin using an internal AI-supported platform.
Executive Order of December 11, 2025
The executive order, titled “Protecting U.S. Investors from Foreign-Sponsored and Politically Motivated Proxy Advisers,'' directs a framework for multi-agency review and potential action aimed at addressing perceived market power, conflicts of interest, and politicization of proxy advisors. The Order directs the SEC Chairman to review existing proxy advisor-related guidance, consider any amendments or revocations that are inconsistent with the purpose of the Order, and to enforce the anti-fraud provisions of the federal securities laws with respect to material misstatements or omissions in proxy advisor recommendations.
The church also:
- Requests an evaluation of whether voting advisors should be required to register as investment advisors under the Investment Advisers Act.
- Ask whether additional requirements are warranted to increase transparency regarding proxy advisors' recommendations, methodologies, and conflicts of interest, including those related to diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) considerations.
- Directs an analysis of whether the widespread and common use of proxy voting advisors by investment advisers may, in certain circumstances, facilitate arrangements that would constitute the existence of a “group” under Section 13(d)(3) or Section 13(g)(3) of the Exchange Act.
- Directs the Federal Trade Commission (FTC), in consultation with the Department of Justice (DOJ), to review state antitrust investigations and investigate unfair, deceptive, or anticompetitive conduct by proxy advisors. and
- Directs the Department of Labor (DOL) to review and potentially revise its ERISA-related fiduciary guidance regarding proxy voting and engagement, including whether proxy voting advisers advising ERISA plans should be treated as investment advice fiduciaries.
No action has yet been taken under the order, but it could theoretically result in penalties for proxy advisory firms whose reports contain false statements or omissions, and would put pressure on proxy advisory firms to release their reports to issuers before publication. There could also be pressure to increase methodological transparency, eliminate ESG/DEI-based recommendations, and weaken the ISS and GL overall through antitrust litigation.
SEC Speech: (Re)Empowering Fiduciaries in Proxy Voting
In remarks to the New York City Bar Association on January 8, 2026, Brian Daley, director of the SEC's Division of Investment Management, emphasized that proxy voting itself is a fiduciary function and urged investment advisors to reconsider their long-standing “vote everything” practices and routine reliance on proxy advisory firms.
Although this comment was not part of the rulemaking, Daly emphasized that investment advisers need to reevaluate their proxy voting policies and processes, including whether voting on all items is appropriate or consistent with the fund's strategy and mission. He also reiterated the SEC's long-standing view that withholding a vote can be a permissible option if the cost of voting exceeds the expected benefit and does not itself violate fiduciary duties. Mr. Daly emphasized that investment advisers must vote informedly and in the best interests of their clients, noting that while the use of proxy voting advisers may be appropriate in certain circumstances, investment advisers cannot outsource fiduciary judgment and must address the extent of such trust through their arrangements with clients and ongoing monitoring.
Daly also said that artificial intelligence tools could serve as a useful aid in managing the scale and complexity of proxy voting, as long as investment advisers are responsible and make clear and accurate disclosures about their use. Finally, he expressed concern that habitual or mechanical compliance with the recommendations of proxy voting consultants could, in some cases, suggest that multiple investors are acting in concert, raising issues under the “group” concept in Section 13(d) (as reflected in the Order above).
Relocation of ISS and GL: From “recommendation” to “research”
Recent announcements indicate that both companies are adapting their services to reflect investor customization demands and reduce reliance on a single standardized benchmark recommendation. Importantly, GL has announced that starting in 2027, it will move away from voting recommendations based on a single benchmark/internal policy, and instead offer multiple perspectives aligned to different stewardship philosophies (e.g., business alignment, governance fundamentals, sustainability, active ownership, etc.), allowing clients to choose the lens that aligns with their policies.
Similarly, while ISS continues to publish benchmark voting policies and recommendations for many of its clients, its product direction reflects the growing demand for customizable, policy-driven research rather than a single default recommendation.
JPMorgan Asset Management suspends use of proxy advisor for U.S. voting
JPMorgan Asset Management will cut ties with proxy advisory firms for U.S. voting and will rely on an in-house AI-supported platform (Proxy IQ). The change applies to U.S. corporate voting. Proxy IQ is described as an internal AI-powered platform that manages voting, analyzes data from thousands of annual meetings, and generates internal guidance for portfolio managers.
This move is the first of its kind among major global asset management companies, and will increase pressure on ISS/GL amid intense political scrutiny. Based on this move, more issuers are likely to expect differentiated, company-specific stewardship decisions (including where previously proxy advisor policy frameworks served as a common baseline).
Potential impact
The powers of voting advisers have been under scrutiny for years, with successive administrations waxing and waning attempts to regulate them. It's too early to tell whether JPMorgan's change in direction is indicative of a trend among companies with in-house analytical capabilities. If the proxy advisor landscape shifts to a research-first and investor-specific application, the voting dynamics of executive compensation could change in several ways.
- Say-on-pay predictability: Where some investors have traditionally tracked the results of the ISS/GL benchmark, internalized or customized approaches may introduce further dispersion in voting results and rationales.
- Focus on disclosure and context: Clarity in compensation discussion and analysis (CD&A), rigor in targeting, and explanation of discretionary/special adjustments may be more important when investors are not locked into a single proxy advisor's recommendation.
- Performance-based evaluations may involve more “multiple methodologies.” Quantitative screening of proxy advisors will remain influential, but investors may apply different peer sets, time periods, and qualitative overlays, making early identification of “story gaps” even more important.
- Committee accountability remains, but the triggers may be different. A negative vote against a compensation committee member is likely to be driven more by each investor's stewardship framework than by a standardized proxy advisor escalation policy.
- Engagement strategies may change: With investors potentially relying less on the shorthand of proxy advisors, companies may benefit from reaching out earlier to explain pay design decisions (including one-time compensation, retention measures, changes in performance metrics, relative total shareholder returns (TSR) or other modifiers).
We will continue to monitor whether JPMorgan's decision signals broader changes and will keep clients informed if AI-related developments result in measurable changes in investor behavior or proxy voting outcomes.
