January 24, 2020
January 24, 2020
Secretary Vanessa Countryman
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
File Number S7-22-19
Dear Secretary Countryman,
Retirement should not be stressful—it should be a time when those who have saved carefully throughout our careers to ensure we could provide for ourselves later in life are able to enjoy the fruits of our labor. However, due to the actions and shady business practices of proxy advisory firms, which exercise an alarming amount of control over the investments and pensions of tens of millions of Americans, that is becoming increasingly harder to do.
As a retired nurse practitioner who relies on an investment account to maintain a steady stream of reliable income, I am deeply concerned about recent developments in the management of public employee pensions. That is why I am grateful the Securities and Exchange Commission (SEC) considering potential amendments to the rules governing these firms. I hope you consider my point of view as you work toward a final decision on this matter.
For some time now, I have been monitoring the behavior of the proxy advisors who are entrusted with investment decision-making for pensions and investment funds, like the one I rely on. These advisors have been behaving more as political activists than financially responsible stewards of healthy investment portfolios, to the detriment of retirees who will count on these funds.
The best recommendations proxy advisors could provide involve investing in companies and industries that will provide the healthiest returns, period. I can sympathize with those who dont want to see their money supporting causes they do not agree with, but the fact is that you cannot live on ideals—if you could, I imagine plenty of people would never have to work again. Retirement is either here or quickly approaching for many Americans, so ensuring our investment mix is profitable and contributing strong returns should be the only factors under consideration.
Unfortunately, highly politicized proxy advisors seem to be acting on their own ideological agendas instead of their fiduciary responsibilities to investors. Rather than providing investment advice that will maximize returns, they are basing their recommendations on their own principles on certain political and social issues. This simply will not work.
For example, it has been proven that making investment decisions based on these socially driven issues yields a near-44-percent lower return on investment than standard investment funds. Moreover, without reform and a refocus on maximizing healthy returns, data shows that retirement nest eggs like the one on which I rely will be 10 percent lower. This should not be acceptable.
These firms need more oversight and accountability, plain and simple. As it is, just two firms—Glass Lewis and Institutional Shareholder Services—control 97 percent of the proxy advisory market. Proof of the activism perpetuated by these firms exists in the mere existence of ISS specialty reports. These reports are designed to advance the interests of specific investors as opposed to what is best for investors growth. The thought that the average investor cares more about social faith-based or sustainability investing as opposed to a secure retirement defies the basis for investing.
Managing retirement investments should be devoid of politics. I fully support the rights of individual investors to make socially conscious investment decisions that reflect their personal views I simply cannot abide those views forcing their way into MY pension funds as I try to enjoy my retirement years.
Please take my perspective under advisement, and move forward with proposed rule changes for the proxy advisory industry. I appreciate your willingness to hear from those affected by this important issue.
Best,
Janet Goen