SEC And Large Banks Continue Pushback On Proxy Advisers After JPMorgan

The Wall Street Journal is reporting that Wells Fargo has adjusted its approach to proxy voting and its use of proxy-advisory services, adding another high‑profile example to the growing trend of large financial institutions recalibrating their reliance on proxy advisers. This development follows closely on the heels of JPMorgan's separation from certain proxy-advisory workflows discussed in our recent posts (here and here), and it reinforces the likelihood that the 2026 proxy season will see more issuer‑specific voting and less mechanical adherence to third‑party policies.

According to the Journal's reporting, Wells Fargo intends to place greater emphasis on firm‑specific analysis and internal stewardship judgments rather than defaulting to standard proxy‑adviser recommendations. While proxy-advisory research and logistical support may continue to play a role, the thrust of the change is to narrow the influence of one‑size‑fits‑all voting frameworks on the ultimate voting outcome. The move reflects a broader reassessment among large institutions of how proxy-adviser inputs intersect with fiduciary duties, regulatory expectations, and the increasing complexity of environmental, social, and governance proposals.

In parallel, the SEC's Director of the Division of Investment Management, Brian Daly, used January 8 remarks at the New York City Bar Association to urge advisers to re-evaluate proxy voting policies and processes, emphasizing that advisers need not vote every proxy and may limit or decline voting where costs outweigh benefits, consistent with fiduciary duty and client mandates. He cautioned against treating proxy-adviser defaults as a "de facto regulatory safe harbor" and encouraged advisers to ensure votes reflect informed, client-aligned judgment rather than habitual adherence to third-party policies. Daly also highlighted the emerging role of AI in proxy voting, calling AI-assisted recommendations a "near-term reality". He further noted the policy context created by the December 2025 Executive Order directing the SEC to scrutinize proxy-advisor influence, conflicts, transparency, and potential Section 13(d) "group" risks, underscoring that the regulatory landscape is evolving.

This reported shift aligns with the themes we highlighted in our prior pieces: first, JP Morgan's reconfiguration of its engagement with proxy advisers signaled that large, sophisticated voters are prepared to incur additional cost and process complexity to ensure votes reflect internal views; second, ongoing policy interest in proxy-adviser oversight and the voting power of large index managers continues to create pressure for more transparency, accountability, and firm‑level discretion. Against that backdrop, Wells Fargo's changes are notable not only for what they say about adviser influence, but also for how they may reset market expectations around stewardship resourcing and methodology.

For companies preparing for the 2026 proxy season, the implications are immediate. Issuers should anticipate that some large shareholders may be less predictable where prior seasons saw closer alignment with proxy‑adviser recommendations. That unpredictability cuts both ways: proposals that might previously have faced automatic resistance under broad policy screens could now receive more nuanced consideration, but routine items could also draw sharper scrutiny if firm‑specific facts point in a different direction than a generalized policy would. The net effect is likely to be more dispersion in voting outcomes across similarly situated issuers and a premium on targeted engagement that addresses the particular investors' frameworks.

Boards and management teams should also be ready for incremental process changes on the investor side. If large institutions are devoting more resources to in‑house analysis, they may expand direct outreach windows, refine their information requests, or seek more granular disclosures on topics such as board refreshment, executive pay structure and rigor of performance metrics, climate transition plans and interim targets, and governance of material social‑risk areas. Companies that can clearly articulate the business rationale behind their governance and sustainability choices—and demonstrate credible board oversight—will be better positioned as investors apply a more bespoke lens.

From a regulatory perspective, intensified emphasis on investor‑specific analysis may reduce the practical sway of proxy‑adviser policy updates in any given year, even as the advisers remain central to research and execution. At the same time, a more fractured voting landscape can complicate the path to majority support or to successful opposition on shareholder proposals. Expect close votes to become more common, heightened attention to the factual record in the proxy statement, and increased sensitivity to how incremental changes in disclosure or program design could tip outcomes. Daly's remarks reinforce this shift by reminding advisers that they may tailor or even forego voting where appropriate, should avoid rote reliance on proxy-adviser defaults, and can deploy AI tools with proper controls— all developments that could diffuse proxy-adviser influence and increase issue-by-issue variability in outcomes.

The "de‑risking" strategy for issuers in 2026 is unlikely to be a simple alignment with any particular policy rubric. Instead, companies should focus on building an investor‑specific engagement map, addressing the most salient points of divergence with their top holders, and ensuring the proxy statement makes the strongest possible evidentiary case for the board's judgments. With multiple large banks now signaling a move away from default reliance on proxy‑adviser recommendations, stewardship in 2026 is poised to be more individualized, more analytical, and ultimately more contested at the margins.

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