Wells Fargo has launched an internal proxy voting service within its wealth and investment management division, reducing its reliance on external proxy advisory firms amid growing criticism that such firms prioritise social agendas over shareholder value.
The US bank has also ended its relationship with proxy adviser Institutional Shareholder Services (ISS), according to a source familiar with the matter. The move marks a shift towards greater in-house control over how shareholder votes are cast on corporate governance and shareholder proposals.
Proxy advisory firms play a central role in analysing board elections, executive pay and shareholder resolutions, issuing voting recommendations to institutional investors ahead of annual general meetings. However, they have come under increased scrutiny from conservative groups and some large asset managers, who argue that proxy advisers too often encourage votes against boards or directors and place disproportionate emphasis on climate and social issues.
Wells Fargo said it will now manage proxy voting under a customised internal policy and voting instructions designed to reflect clients’ long-term economic interests. The bank said the change will streamline the proxy voting process, reduce dependence on third-party advisers and increase independence in decision-making.
As part of the shift, Wells Fargo is expanding its relationship with Broadridge Financial Solutions, which provides shareholder communications and proxy processing services.
Wells Fargo’s wealth and investment management division oversees approximately $2.5 trillion in client assets, making it one of the largest wealth managers in the United States. The development was first reported by the Wall Street Journal.
The move follows a broader trend among large US financial institutions reassessing their use of proxy advisers. Earlier this month, JPMorgan Chase said its asset management division no longer plans to rely on proxy advisory firms in the US.
The issue has also drawn political attention. In December, US President Donald Trump signed an executive order increasing oversight of the proxy advisory industry, arguing that leading firms often advance politically motivated agendas.
Corporate governance experts and legal analysts have warned, however, that tighter restrictions on proxy advisers could weaken shareholder rights. The proxy advisory industry has repeatedly rejected allegations of bias, maintaining that its recommendations are independent and research-driven.
