DOL Guidance Clarifies Proxy Advisors May Be Fiduciaries
Summary
The DOL issued Technical Release 2026-01 clarifying that proxy advisory firms are functional fiduciaries under ERISA when they exercise authority over shareholder voting rights or provide investment advice for a fee on how plans should exercise those rights. The Release establishes that managing proxy rights is fiduciary in nature and must be undertaken for the exclusive purpose of maximizing risk-adjusted return on investment, departing from prior Biden administration guidance on ESG considerations. The DOL also addressed state laws regulating non-financial objectives in securities recommendations, finding such laws are generally not preempted by ERISA.
Plan sponsors using proxy advisory services should audit their service agreements and proxy voting policies for consistency with the Release's risk-adjusted return standard, particularly if prior policies contemplated ESG or other non-financial factors. Proxy advisory firms subject to this guidance should assess whether existing disclosures and voting guidelines adequately reflect their new fiduciary status and heightened standard of care.
What changed
Technical Release 2026-01 expands fiduciary obligations under ERISA to encompass proxy advisory firms that exercise control over or advise on shareholder voting rights for covered plans. The Release establishes that proxy voting management must be conducted for the exclusive purpose of maximizing risk-adjusted investment returns, effectively reversing prior Biden-era positions that permitted consideration of ESG and other non-financial factors. The DOL also addressed ERISA preemption of state laws regulating non-financial objectives in securities recommendations, concluding such state laws generally apply to ERISA plans.
Plan sponsors, plan fiduciaries, and investment advisers that rely on proxy advisory services should review proxy voting policies, service agreements, and fiduciary processes to ensure alignment with the risk-adjusted return standard articulated in the Release. Proxy advisory firms themselves may face heightened due-diligence and disclosure expectations as functional fiduciaries.
Archived snapshot
Apr 22, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
April 21, 2026
DOL Guidance Clarifies Proxy Advisors May Be Fiduciaries
Haynes Boone + Follow Contact LinkedIn Facebook X ;) Embed The DOL recently issued Technical Release 2026-01 concerning the exercise of proxy voting and shareholder rights by proxy advisory firms with respect to ERISA plans (the “ Release ”), providing, among other things, that proxy advisory firms are functional fiduciaries for ERISA purposes, and subject to a heightened standard of care, to the extent such firms either (i) exercise authority or control over such shareholder rights, including the voting of proxies, or (ii) provide investment advice for a fee regarding how plans should exercise these rights.
The Release indicates that the DOL has long recognized that voting rights and other shareholder rights attributable to shares under the plan are plan assets subject to ERISA. The Release clarifies “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,” which deviates from prior DOL guidance issued under the Biden administration regarding the consideration of other factors, including environmental, social, and governance factors.
In addition, the Release addresses state laws which regulate the use of non-financial objectives in securities recommendations or investment advice by financial advisors, including proxy advisory firms, and whether such state laws are preempted by ERISA and therefore not applicable to ERISA plans. The DOL indicates that such state laws are generally not preempted by ERISA, which appears to signal the current administration’s support for such state laws.
The Release is available here. We will continue to monitor developments in this area.
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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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