DOL Issues ERISA Fiduciary Guidance on Proxy Advisory Services

April 21, 2026

DOL Issues New Guidance Targeting Retirement Plan Proxy Voting and Proxy Advisory Services

Erin Cho, Rebecca Davenport, Maureen Gorman, Richard Nowak, Stephanie Vasconcellos Mayer Brown + Follow Contact LinkedIn Facebook X ;) Embed

On April 15, 2026, the US Department of Labor (“DOL”) issued Technical Release 2026-01, which provides guidance on the “application of ERISA's fiduciary requirements and preemption provisions to proxy advisory services.” 1 The Technical Release follows President Donald Trump’s December 2025 Executive Order, which directed DOL to update its regulations and guidance regarding proxy advisors and proxy voting with respect to ERISA-governed plans. As described more fully below, the Technical Release explains DOL’s views on (1) when a proxy advisory firm is a functional or investment advice fiduciary under ERISA, and (2) when a state law regulating proxy advisory firms is preempted by ERISA.

The bottom line, as DOL emphasizes in its accompanying News Release, is that DOL believes “proxy advisory firms commonly engage in business practices that meet the test for being investment advice fiduciaries” and also “regularly fit the definition of functional fiduciaries” under ERISA. Accordingly, proxy advisors, plan sponsors, and plan fiduciaries should ensure they are engaging in a prudent process and acting in the best interests of their plan participants when voting the shares of ERISA-governed plans.

BACKGROUND

DOL has long considered voting rights and other shareholder rights attributable to shares held by ERISA plans to be plan assets, and that ERISA’s fiduciary duties of prudence and loyalty apply to the management of those rights. More than three decades ago in a 1988 letter, DOL stated that it was “the Department’s position that the decision as to how proxies should be voted . . . are fiduciary acts of plan asset management.” 2 DOL reinforced this view in a series of Interpretive Bulletins 3 and recent regulatory amendments to the ERISA investment duties regulation (29 C.F.R. § 2550.404a-1). 4 Using this prior guidance and rulemaking as a backdrop, DOL emphasizes in the Technical Release “that the management of proxy rights is fiduciary in nature and must be undertaken for the exclusive purpose of maximizing risk-adjusted return on investment” and not for the promotion of any particular legislative, regulatory, or public policy issue.

WHEN ARE PROXY ADVISORY FIRMS ERISA FIDUCIARIES?

The Technical Release explains that proxy advisory firms are often acting as ERISA fiduciaries when exercising authority or control over the exercise of shareholder rights with respect to shares owned by ERISA plans—including proxy voting—and when providing advice to ERISA fiduciaries to assist them in exercising their shareholder rights.

First, the Technical Release explains that, under ERISA Section 3(21)(A)(i), an entity is a functional fiduciary to the extent it “exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets.” Because DOL considers the management of shareholder rights on behalf of an ERISA plan to be a fiduciary function, a proxy advisory firm that has “discretion and control over the voting policies and/or the casting of votes” for shares held by ERISA plans will be a functional fiduciary.

Second, the Technical Release explains that, under ERISA Section 3(21)(A)(ii), an entity is a fiduciary if it renders investment advice for a fee to plans with respect to plan assets. With the recent vacatur of DOL’s 2024 fiduciary rule, DOL explains that a proxy advisory firm that provides advice and services to ERISA plan clients on how to exercise their shareholder rights will be a fiduciary if it satisfies the five-part test from DOL’s 1975 regulation. Under that test, a person is a fiduciary if they: (1) render advice as to the value of securities or other property, or make recommendations as to the advisability of investing in, purchasing, or selling securities or other property; (2) on a regular basis; (3) pursuant to a mutual agreement, arrangement, or understanding with the plan or a plan fiduciary; (4) that the advice will serve as a primary basis for investment decisions with respect to plan assets; and (5) that the advice will be individualized based on the particular needs of the plan. 5

Applying the five-part test, DOL explains that “in general, proxy advisory services concerning how to exercise shareholder rights based on the particular needs of an ERISA-covered plan on an ongoing basis, if rendered for a fee pursuant to a mutual understanding, will ordinarily satisfy the five-part test, though the ultimate analysis depends on the facts and circumstances.”

Finally, DOL emphasizes that a contractual arrangement with a proxy advisory firm to provide investment advice regarding ERISA plan assets (i.e., advice regarding the exercise of shareholder rights) for a fee “may be a relevant factor in determining whether there is a mutual understanding between the parties that the advice will serve as a primary basis for investment decisions.” DOL also “cautions” that contractual disclaimers seeking to avoid satisfying the five-part test are “not necessarily determinative.”

STATE LAW PREEMPTION

The Technical Release also addresses DOL’s view on when ERISA preempts (or does not preempt) state laws regulating proxy advisory services. ERISA generally preempts state laws if they “relate to” an ERISA plan, which the US Supreme Court has interpreted to mean the state law has a “connection with” or makes “reference to” an ERISA plan. 6 Applying this standard, the Technical Release explains that a state law that requires proxy advisory firms to “include disclosures to their investor clients when the firm's research or recommendations take non-financial factors into consideration” “does not, in and of itself, have any impact on plan administration implicating ’connection with’ preemption.” 7 This is because a firm providing proxy advisory services to ERISA plans may not “tak[e] into account anything other than the exclusive purpose of providing benefits to participants and beneficiaries by maximizing risk-adjusted returns.” As such, no proxy advisory firm complying with its fiduciary obligations under ERISA “would ever be required to make any disclosure or take any act with respect to any ERISA plan” under the state law.

TAKEAWAYS FOR PLAN SPONSORS AND FIDUCIARIES

The Technical Release is another reminder for plan sponsors and fiduciaries that proxy voting and the exercise of shareholder rights by ERISA plans continues to be a focus of the Trump administration and DOL. While not specifically addressed in the Technical Release, ERISA plan fiduciaries have a duty to monitor the activities of their appointed fiduciaries and plan service providers. Accordingly, if an ERISA plan engages a proxy advisory firm to vote the plan’s shares or to provide advice and recommendations regarding the voting of plan shares, the plan’s fiduciaries have an affirmative duty to monitor the proxy advisory firm to ensure it is complying with its fiduciary obligations. This also means that, if the proxy advisory firm breaches its fiduciary duties by not acting “for the exclusive purpose of maximizing risk-adjusted return on investment,” the plan fiduciaries could be held jointly and severally liable for failing to properly monitor the advisory firm. The Technical Release reiterates that any exercise of proxy or shareholder voting to promote legislative, regulatory, or public policy issues through the proxy process violates ERISA’s exclusive purpose rule and is a breach of the duty of loyalty.

Historically, for many plan fiduciaries, the focus of their fiduciary process has been on investment performance and fees to ensure they are offering prudent investments to their participants. Proxy voting and the services provided by proxy advisory firms have rarely been a significant topic of discussion in investment committee meetings. However, the current focus on proxy advisory firms and proxy voting is a good reminder to plan fiduciaries that they need to be thinking about proxy voting as part of their fiduciary process.

As part of this, plan fiduciaries should proactively review their contractual arrangements with proxy advisory firms to determine whether they are acting in a fiduciary capacity under ERISA Section 3(21) or the 1975 five-part test and, if so, whether their services have been consistent with their fiduciary obligations and in the best interests of the plan. In addition, for ERISA plans that vote their own shares, the plan fiduciaries should ensure the voting decisions are in the best interests of the plan and consistent with maximizing risk-adjusted returns for the plan.

1 Although the Technical Release is dated April 1, 2026, it was published by DOL on April 15, 2026, along with the accompanying Press Release.

2 See DOL Letter to Helmuth Fandl, Chairman of the Retirement Board, Avon Products, Inc., 1988 WL 897696 (Feb. 23, 1988) (“Avon Letter”).

3 See DOL Interpretive Bulletin 94-2 (59 FR 38860 (July 29, 1994)); DOL Interpretive Bulletin 2008-02 (73 FR 61731 (Oct. 17, 2008)); DOL Interpretive Bulletin 2016-01 (81 FR 95879 (Dec. 29, 2016)).

4 For example, 29 C.F.R. § 2550.404a-1(d)(1) provides that “The fiduciary duty to manage plan assets that are shares of stock includes the management of shareholder rights appurtenant to those shares, such as the right to vote proxies.”

5 29 CFR 2510.3-21(c).

6 See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995).

7 Although not specifically mentioned in the Technical Release, the preemption discussion appears to be targeting the recently enacted Texas law (SB 2337) requiring proxy advisory firms to provide additional disclosures to their clients if their “proxy advisory services,” including any “advice or a recommendation on how to vote on a proxy proposal or company proposal,” are based in whole or in part on nonfinancial factors.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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