Dimon’s Annual Letter Highlights Challenges for Asset Management

In his annual letter to JP Morgan Chase & Co. shareholders, Chairman & CEO Jamie Dimon warned of several issues impacting the asset management industry and JP Morgan itself. Dimon warned of the impact of artificial intelligence (AI), the “hijacking of annual shareholder meetings,” and the evolving influence of proxy advisors, among other issues. On AI, Dimon wrote “We have been actively using predictive AI and ML for years — and now have over 400 use cases in production in areas such as marketing, fraud and risk…” He added that JP Morgan is further “exploring the potential that generative AI (GenAI) can unlock across a range of domains, most notably in software engineering, customer service and operations, as well as in general employee productivity.” He noted that AI has the potential to impact every job function as well as overall workforce composition.

On proxy advisory firms, Dimon wrote that when proxy advisory firms began, they were a wealth of data and information. But as they shifted toward providing recommendations, they may have stepped a bit further than is helpful. He noted that both ISS and Glass Lewis are owned by foreign entities and may have an “undue influence” on proxy voting in American capital markets. Dimon noted that many asset managers have stewardship experts that review proxies, “the reality is that many of these committees default large portions of what they do to proxy advisors and, more troubling, make it harder for actual portfolio managers to override this decision making.” He added that while the number of proxies and complexity can be large, it is “lazy and wrong” to delegate this decision-making to proxy advisory firms. Dimon stated that JP Morgan Asset Management’s proxy voting process will be changed to “to amplify the role of portfolio managers and to address the perception of asset managers’ reliance on third-party advisor voting recommendations.”

Click here to read Jamie Dimon’s annual letter to shareholders.