BlackRock looks to UK savers to pilot shareholder engagement.

Britain is leading the world in enabling pension savers to vote the shares in the funds they use to build up DC pensions.

Thanks to Georgia Stewart of Tumelo who has done as much as anyone to create an appetite among savers and progressive providers. Savers can already influence voting decisions of fund managers who manage the assets, but BlackRock is looking to go further – actually giving them a voice at shareholder meetings.

If you own shares in a public company, you get to vote on key issues, such as who its directors are or a proposed merger with another company. That’s because for centuries the law has sensibly said that the suppliers of equity capital should choose their stewards and weigh major corporate changes.

But if you hold shares through a pooled fund, the fund managers usually decide how to vote your interests. That’s due to practical difficulties that arise when the capital of millions of small investors is pooled into a massive fund.

But asset managers are cottoning on to two new trends

  1. They aren’t necessarily popular with their savers if they take the wrong decision (and typically any decision is wrong to someone)
  2. There are more and more savers who are interested in making their money matter, and given half a chance (which Tumelo does), they will.

Many American commentators see shareholder voting as something that asset managers should stay clear of, offloading their fiduciary responsibilities to anyone who will take them- including savers.

Even so, when reading the latest on the mighty BlackRock’s shareholder voting strategy I was surprised to discover that the UK is considered a benign test ground due to engaged consumers and friendly regulators.

We are piloting a program in the UK, in collaboration with
other market participants. This pilot will allow us to test what is possible and to gauge demand among investors and interest across the broader investing ecosystem. If successful, this will be an important proof of concept, and its implementation will help to flag issues along the way.

And soon after this…

The pilot seems to have been sanctioned from the top.

This seems to be a potential breakthrough for those who have been calling for shareholder action for the past 20 years. Organisations such as Share Action, Minerva, PIRC and others.

But how widespread will voting be? Well that depends on the organisations offering BlackRock funds on their platforms and how easy they make it for savers to get involved.

“Engagement” seems the holy grail right now but insurers seem better at talking about it than allowing it to happen. I am still waiting to be able to use Tumelo to influence voting on my workplace pension funds with L&G. I’m hoping that the new IGC Chair, Joanne Segars, will make this happen (but I’m not holding my breath!).

It’s easy to be cynical about all this. It’s true that many workplace pension providers see engagement as code for “getting the member contributions up”. Important as pension expectations are,  they are not the only reason for people to get excited about pension savings – many of us can’t wait for retirement!

Conviction is free –  it should cost us savers nothing but our time to make our money matter.

Let’s hope that by the end of the decade, savers will expect to have influence over all the shares they own and that we start to see influence translating into actual votes. If we are serious about making our money matter, some of us need to get off our backsides and do something about what happens to it!

I’m proud that the Americans are looking to us to take the lead – and I’m proud to be working in an environment where firms like Pension Bee, Tumelo and AgeWage are thriving.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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