Vanguard Group is planning a trial to give retail clients more say over how their shares are voted at corporate meetings, as large money managers’ influence over hot-button issues faces mounting scrutiny.
Instead of making decisions exclusively on its own, Vanguard will give individual investors in several equity index funds more options about how their shares are voted, the Valley Forge, Pennsylvania-based company said Wednesday in a statement. It will begin testing the strategy early next year.
“As the only investor-owned asset management firm, Vanguard is uniquely positioned to partner with Main Street investors on ways to participate in the proxy voting process,” Anne Robinson, Vanguard’s general counsel, said in an email. “This early 2023 pilot will give our investors-owners the chance to express their preferences for how the underlying shares of their equity index holdings are voted.”
The trial is expected to offer investors additional voting options including following company management recommendations, opting not to vote or choosing to rely on guidance from a third party. Vanguard’s stewardship team currently helps oversee voting policies for about 30 million investors.
“Our clients have diverse perspectives, and a growing number would like the option to weigh in on how their index funds vote on important proxy questions at the companies held in the funds,” Vanguard said in the statement.
Big asset managers are facing increased questions from investors and lawmakers about the outsize sway firms can have over the corporate world. Each of the three biggest index-fund managers — BlackRock Inc., Vanguard and State Street Corp. — is a top-five shareholder in most S&P 500 companies, giving them significant power at shareholder meetings.
BlackRock has started giving institutional investors more control over how their shares in index equity funds are voted and said in June that clients with about $530 billion in combined assets had participated. Last month, Charles Schwab Corp. said it was testing a strategy of polling shareholders about their views on broad topics affecting companies in three funds and would use the results to determine the firm’s approach to proxy votes.
Asset managers are facing a growing backlash this year over ESG — environmental, social and governance — matters. Republican officials across the U.S. have scrutinized firms for consolidating power and pursing societal agendas, and in BlackRock’s case have withdrawn money from the firm over its stances.
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.
"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
Chair also praised the passage of stablecoin legislation this week.
Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
