Bite-Sized Business Law Firing the Humans: JPMorgan’s Big Bet on AI Proxy Advisors
What happens when one of the world’s largest asset managers decides to hand its proxy voting recommendations process to a robot? In this episode, Michael Levin, corporate governance expert and host of The Shareholder Primacy Podcast, unpacks JPMorgan Asset Management’s decision to stop using renowned proxy advisory firms ISS and Glass Lewis and instead rely on its in-house AI platform, Proxy IQ. Michael explains what proxy advisory firms do, why they are important, and why they face growing criticism from issuers and politicians. He unpacks how trends like ESG backlash, indexing, and “rational apathy” have reshaped institutional voting. Michael also explores what an AI-driven proxy system might do well, where it could fall short, and what this shift could mean for corporate governance and ordinary investors who depend on institutional stewardship. Join the conversation to find out what JPMorgan’s experiment means for the future of proxy advice and what is at stake for investors. Tune in now!
Key Points From This Episode:
- What proxy advisory firms actually do and why they work closely with large asset managers.
- Learn how ISS and Glass Lewis became influential public companies.
- Hear about the common criticisms of proxy advisory firms and their one-size-fits-all policies.
- Assess the costs of proxy advisors for smaller investors and the possible conflicts of interest.
- How ISS and Glass Lewis recommended Tesla shareholders vote on Elon Musk's compensation package.
- Unpack Jamie Dimon’s “incompetent” comment about proxy advisory firms.
- Why JPMorgan Asset Management decided to stop using ISS and Glass Lewis.
- Understand why proxy firms are currently receiving significant criticism and pushback.
- Discover how an AI system could apply internal processes and data for voting decisions.
- Michael’s outlook for proxy advisory firms and whether they will be replaced by AI.
- The risks associated with institutions' disengagement from voting and stewardship processes.
- Find out what the current trends mean for retail investors and why Michael still recommends low-cost diversified funds.
Links Mentioned in Today’s Episode:
The Shareholder Primacy Podcast
Institutional Shareholder Services (ISS)
Fordham University School of Law Corporate Law Center