The SEC encouraged a discussion of advisers’ proxy arrangements in response to President Trump’s recent proxy voting executive order. In a December 11, 2025, Executive Order, President Trump directed the SEC to consider a number of actions to materially reshape the proxy advisory landscape, including a direction to address the influence that proxy advisors and their related consultancies exert to promote “radical politically-motivated agendas.”

The SEC’s Director of the Division of Investment Management Brian Daly (in his official capacity), in a January 8, 2026 speech at the New York City Bar Association, invited registered investment advisers to revisit the assumption that they must “vote all proxies,” and instead to reassess whether, when, and how they vote client proxies in a manner aligned with their fiduciary duties and investment mandates.

How “vote all proxies” emerged – and what the law actually requires

Daly traced today’s prevalent “vote all proxies” mindset to the Department of Labor’s 1988 “Avon Letter” and the SEC’s 2003 adoption of the Proxy Voting Rule, under which an adviser that has assumed voting authority owes duties of care and loyalty to vote in the client’s best interest and to adopt policies and procedures reasonably designed to ensure that outcome. Daly expressed that the takeaways “votes have value” and “we will vote all proxies” fueled the growth of proxy advisory firms over time. The firms’ research began as helpful, but the industry soon became an oligopoly whose recommendations became the default and widely swayed the market.

Daly shared that the 2003 Proxy Voting Rule recognized that an adviser with proxy voting authority owes duties of care and loyalty, which include monitoring corporate events and voting proxies in the client’s best interest. The release also noted that failing to vote every proxy is not automatically a violation of fiduciary duties; in fact, there are instances in which abstaining from a vote could be in the best interest of the client – for example, when the cost of voting exceeds the expected benefits. This flexibility was reiterated in the SEC’s 2019 proxy voting guidance, which made clear that advisers and boards could agree to voting authority guidelines through full and fair disclosure and informed consent.

Informed voting and practical takeaways for advisers

Daly encouraged managers to align voting practices with investment mandates, noting that quantitative and systematic managers may conclude that votes related to certain social and political matters do not advance their strategies and impose costs without measurable benefits. By contrast, fundamental, activist, private equity, and venture managers will often be expected to vote on core corporate matters. Daly shared that there is “nothing inherently wrong” with proxy advisers and that they can even be useful when operating under tailored instructions and oversight. The key is an investment mandate and client-influenced decision with tailored and independent analysis, rather than automatic “vote all” practices.

Daly encouraged advisers and boards to be intentional in their voting decisions. This may involve limiting or declining voting where appropriate when consistent with mandates and disclosures and when doing so satisfies duties of care and loyalty. Alternatively, when advisers do choose to vote, they should ensure their processes deliver independent, client‑centric judgments, rather than defaulting to blanket templates. For passive or systematic strategies, boards and advisers should revisit authority and policy alignment, especially where voting could be seen as advancing personal or irrelevant preferences. And, if the voting process is dependent on a proxy advisor and resource-intensive, the adviser should re-evaluate if it is truly in the best interest of the client to vote.

In Conclusion

Overall, Daly stressed the power and authority advisers and boards have in their proxy voting decisions, so long as the decision honors the adviser’s fiduciary duty.  Daly encouraged the informed use of resources to ensure that proxy votes are cast in clients’ best interests, whether that means using a proxy adviser judiciously or using artificial intelligence to analyze proxy statements against clients’ objectives and interests. He stressed that advisers have multiple ways to feel empowered, equipped, and informed to best serve their clients in the proxy‑voting process.

At Thompson Hine we remain ready to answer any questions and assist investment advisers in understanding their role in the evolving space of proxy voting and beyond. Please reach out if we can be of assistance.