LGT Wealth Management, which runs approximately £30.4bn in assets, has become the first wealth manager in Europe to adopt pass-through voting.
According to LGT, this represents a “groundbreaking step” toward reflecting client views on stewardship within a range of passive pooled-fund investments in client portfolios while allowing its voting policy to cover an increasing share of portfolios, as the firm looks to offer clients broader alignment from capital allocation to voting on resolutions.
Traditionally, stewardship and proxy voting have operated through a centralised approach, where asset managers made voting and engagement decisions on behalf of all clients based on standardised policies. The growth of passive investing means a small number of large asset managers have accumulated significant voting power over public companies.
Pass-through voting, however, is designed to give fund investors a direct say in key decisions affecting the companies they invest in. It also recognises a broader trend in the UK with regulators urging trustees and wealth managers to take greater ownership of stewardship practices, rather than delegating responsibilities to asset managers.
Siobhan Archer, global stewardship lead at LGT Wealth Management, said: “This is an important move for us. By adopting pass-through voting, we can better uphold our commitment to enhancing and preserving assets for our clients while creating long-term value for the economy, environment and society. We believe pass-through voting is rapidly becoming a key mechanism in investors’ stewardship toolkits and an effective way to complement our engagement efforts with managers.”
To implement this voting approach, LGT Wealth Management are set to use a service in collaboration with Legal & General (LGIM), State Street Global Advisors and fintech Tumelo, via Tumelo’s ProxySphere technology.
Edd Micklem, VP of investor partnerships at Tumelo, added: “We’ve already seen UK pension funds adopt pass-through voting via our partnership with LGIM. It’s exciting to see asset managers also collaborating with their wealth clients in this way. Wealth managers are paying much closer attention to the degree of voting alignment within their portfolios, particularly on environmental and social issues, so we are thrilled to enable them to take action.”
