White House Explores Proxy Advisory and Index Fund Voting Restrictions: Industry Analysis

This analysis is based on a Wall Street Journal report published on November 11, 2025, revealing that Trump administration officials are discussing executive orders to restrict proxy-advisory firms and limit the voting powers of major index-fund managers [1]. The proposed measures would target Institutional Shareholder Services (ISS), Glass Lewis, and asset management giants including BlackRock, Vanguard Group, and State Street Corporation, potentially restructuring the fundamental infrastructure of U.S. corporate governance [2][3]. While the White House has cautioned that no decisions have been finalized, these discussions represent the most significant regulatory challenge yet to the current shareholder voting system [3].

The proxy advisory industry is highly concentrated, with ISS and Glass Lewis controlling approximately 90% of the market for proxy advisory services [4][5]. These firms analyze shareholder proposals and corporate governance issues, providing voting recommendations to institutional investors ahead of annual meetings [3]. Their recommendations have traditionally been widely used by institutional investors, though they have drawn criticism from corporate executives for their influential role [3].

The index fund industry exhibits similar concentration among three major players:

• BlackRock
  : $12.53 trillion in assets under management as of June 30, 2025 [6]
• Vanguard Group
  : $10.105 trillion in AUM [7]
• State Street
  : $4.715 trillion in AUM [7]

This potential executive action follows several years of regulatory scrutiny and legal challenges:

• SEC Regulation History
  : In 2020, the SEC implemented rules designed to enhance accuracy and transparency of proxy voting advice, but subsequently adopted amendments in 2022 to significantly rescind these rules as they relate to proxy advisory firms [8].

• Judicial Developments
  : In a pivotal July 1, 2025 decision, the U.S. Court of Appeals for the D.C. Circuit ruled that proxy voting advice does not constitute a “solicitation” under the Securities Exchange Act of 1934, invalidating the SEC’s 2020 rule [8].

• State-Level Actions
  : In 2025, both Florida and Missouri attorneys general announced investigations into ISS and Glass Lewis regarding their consideration of ESG and DEI factors [4]. Additionally, a federal judge blocked enforcement of Texas Senate Bill 2237 in August 2025, which would have required proxy advisers to provide disclaimers for ESG-related recommendations [4].

If enacted, the proposed executive order could include:

• Broad bans on shareholder recommendations
  from proxy advisory firms [2]
• Orders blocking recommendations
  on companies that have engaged proxy advisers for consulting work [2]
• Limits on voting powers
  of index-fund managers [3]

ISS and Glass Lewis face potential existential threats to their business models. Both firms have emphasized their transparency and existing SEC regulation [3]. ISS has stated it operates as a registered investment adviser [1], while Glass Lewis has already announced plans to retire its “benchmark” voting recommendations by 2027, shifting to customized approaches [4].

BlackRock, Vanguard, and State Street could face significant restrictions on their voting activities, affecting voting power over trillions of dollars in assets. Notably, Vanguard is currently expanding its proxy voting program, adding $1.4 trillion in S&P funds to its Investor Choice program for 2026 [9].

The potential executive order comes amid significant industry evolution already underway:

• Glass Lewis Policy Changes
  : The firm announced in 2025 that it would eliminate its standard “house” policies by 2027, moving toward more customized voting recommendations [4]
• Vanguard’s Proxy Program Expansion
  : Vanguard is expanding its Investor Choice program to include its largest S&P 500 funds, representing $1.4 trillion in assets [9]
• Increased Regulatory Activity
  : Between January 1 and June 16, 2025, companies submitted 363 no-action requests to the SEC, already exceeding the total 2024 figure of 267 [8]

BlackRock, as the world’s largest asset manager, currently shows strong financial metrics with a market cap of $169.75 billion and positive analyst consensus (71.9% Buy ratings) [0]. However, the stock has experienced some recent volatility with a 5.53% decline over 3 months despite a 14.35% gain over 6 months [0].

: The period between executive order discussion and potential implementation will create significant uncertainty for all market participants [1][2][3]. Market participants should be aware of potential volatility in proxy advisory and asset management stocks based on policy developments.

: Companies will need to develop contingency plans for different regulatory scenarios, potentially increasing compliance costs and operational complexity.

: Proxy advisory firms will likely accelerate their shift toward customized, specialized services rather than standardized recommendations [4]. This could create opportunities for specialized boutique advisory firms.

: Increased demand for proxy voting technology and analytics platforms as institutions build internal capabilities, potentially benefiting fintech companies in the governance space.

: The corporate governance landscape could fundamentally shift away from the current proxy advisory-dominated model toward more direct shareholder engagement.

: U.S. regulatory changes could influence global proxy advisory markets and voting practices, affecting multinational corporations and international investors.

• Increased Voting Complexity
  : Without standardized proxy advisory recommendations, institutional investors may need to develop more sophisticated internal voting capabilities
• Higher Compliance Costs
  : Direct analysis of shareholder proposals would require additional resources and expertise
• Potential Fragmentation
  : Different approaches to voting could lead to less coordinated shareholder action

• Reduced Predictability
  : The loss of standardized proxy advisory frameworks could make voting outcomes more difficult to predict
• Increased Engagement Burden
  : Companies may need to engage more directly with a wider range of institutional investors
• Strategic Opportunities
  : Potential for companies to influence voting outcomes through targeted investor relations

• Reduced Voice
  : Index fund voting restrictions could indirectly limit retail investor influence through passive investment vehicles
• Information Gaps
  : Loss of proxy advisory research could reduce retail access to governance analysis

The regulatory proposals discussed remain speculative and subject to change. Market participants should monitor official announcements and consult legal counsel for specific compliance implications.