JPMorgan Chase Asset Management has terminated its subscriptions to Institutional Shareholder Services and Glass Lewis, the two firms that collectively advise on more than 90% of U.S. institutional proxy votes. The bank now runs all governance analysis and voting decisions through an internal AI-driven platform built over the past eighteen months. The shift affects proxy decisions across $3.9 trillion in managed assets, making it the largest single defection from the traditional proxy advisory duopoly.
The bank disclosed the change in a January governance update distributed to limited partners and consultant networks. JPMorgan's tool ingests SEC filings, board composition data, compensation structures, and shareholder proposal language, then generates voting recommendations calibrated to the firm's proprietary governance framework. The system has been live since the fourth quarter of 2024 and processed its first full proxy season dry run in December. JPMorgan confirmed the tool operated without ISS or Glass Lewis input for 127 portfolio company votes during that pilot window.
This matters because proxy advisors have functioned as the de facto governance infrastructure for institutional allocators since the early 2000s. Pension funds, endowments, and asset managers rely on ISS and Glass Lewis not only for vote recommendations but for the operational scaffolding of processing thousands of ballots across global portfolios. When a $3.9 trillion manager walks away, it signals either that the advisory model has become a liability or that the technology gap has closed enough for large shops to insource the function. JPMorgan's move also removes a significant revenue stream—Glass Lewis and ISS each bill top-tier clients in the low seven figures annually—and creates a template for other bulge-bracket managers weighing similar internalization.
The timing is worth noting. Proxy advisors have faced years of criticism from corporate boards who argue the firms wield outsized influence with minimal accountability. The SEC proposed new disclosure rules in 2022 that would have forced advisors to reveal potential conflicts and methodology details, though those rules remain unfinalized. Separately, ISS came under pressure in 2023 when it recommended against several high-profile executive pay packages that passed with strong shareholder support, raising questions about whether its models lag market sentiment. JPMorgan's internal tool, by contrast, allows the bank to fine-tune governance priorities in real time and avoid the one-size-fits-all scoring that advisors apply across sectors.
Allocators should watch whether other top-ten asset managers follow suit within the next six to nine months. If Vanguard, BlackRock, or State Street announce similar platforms, the proxy advisory business model compresses rapidly. Also worth tracking: whether JPMorgan's AI tool begins licensing to smaller managers who lack the budget to build in-house systems. The bank has not commented on commercialization, but the architecture exists and the marginal cost of adding clients is near zero. Finally, monitor whether ISS or Glass Lewis respond with acquisition activity or partnerships with AI vendors. Both firms have operated as steady oligopolies for two decades. That runway is now shorter.
JPMorgan has not disclosed which AI models underpin the tool, but the governance team has been hiring natural language processing engineers since mid-2023, and the bank's cloud partnership with AWS expanded significantly in the same period. The tool is now the default for all equity mandates.