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Wealth Management firm LGT adopts voting method that lets decisions trickle down to shareholders

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Wealth Management company LGT implements voting process where decisions are passed down directly to...
Wealth Management company LGT implements voting process where decisions are passed down directly to each shareholder.

Wealth Management firm LGT adopts voting method that lets decisions trickle down to shareholders

LGT Wealth Management, a leading global wealth manager, has taken a significant step forward in empowering clients to have a direct influence on stewardship decisions in their passive pooled-fund investments. This move, which is a first in Europe, marks a shift in the industry as regulatory trends in the UK encourage wealth managers to take greater ownership of stewardship practices.

The new approach, known as pass-through voting, allows clients to vote on corporate governance and sustainability issues directly, rather than relying on the fund manager to make decisions on their behalf. This innovation is made possible through a partnership with Legal & General, State Street Global Advisors, and fintech company Tumelo, using Tumelo's ProxySphere platform.

Siobhan Archer, global stewardship lead at LGT Wealth Management, stated that this adoption of pass-through voting enhances their commitment to long-term value creation for the economy, environment, and society. Mark Johnson, head of Institutional Clients at Legal & General, described the partnership as "progressive and exciting," noting that pass-through voting offers investors greater freedom to align their votes with their priorities.

The initiative aims to enhance the alignment of clients' capital allocation and voting preferences with their values, particularly on environmental and social issues. This shift follows similar initiatives by UK pension funds such as the Greater Manchester Pension Fund and the SAUL Pension Fund. LGT Wealth Management manages £30.4 billion in assets.

In practice, pass-through voting means that LGT passes voting rights from pooled fund shares through to the underlying individual investors, empowering them to vote according to their preferences on shareholder resolutions. This enhances client engagement in stewardship decisions traditionally controlled at the fund level. It aligns with growing investor expectations for transparency and active participation in environmental, social, and governance (ESG) matters within passive investments.

This innovation signals a shift in how wealth managers offer stewardship influence in passive investment structures, historically seen as limiting direct client voting rights. Pass-through voting shifts this model by giving individual investors a direct say in corporate governance matters, which could lead to a more engaged and informed investment community.

Clients of LGT Wealth Management, a global leader in wealth management, can now have a direct influence on stewardship decisions through pass-through voting in their passive pooled-fund investments. This new approach, made possible by a partnership with Legal & General, State Street Global Advisors, and fintech company Tumelo, allows investors to align their votes with their personal-finance and wealth-management priorities.

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