Retail Investors form Main Street Investors Coalition

Retail investors are fed up.

My first governance blog post addressed this issue of retail investor frustration and the need for much needed change and improvement in the proxy voting system to ensure retail investors had a meaningful voice that wasn’t overshadowed by large institutional investors. In his new role as Chairman of the SEC, Jay Clayton also emphasized a growing concern that the “voices of long-term retail investors may be underrepresented or selectively represented in corporate governance.”

Well, retail investors are now speaking out and have formed what is called the Main Street Investors Coalition. Retail investors are fed up with the power and control of a handful of institutional investors, which they feel have lost focus and have placed too much attention on politically driven social and environmental matters instead of focusing on financial returns and performance.

Here are some excerpts from this press release:

“A group of leading national financial, retirement and manufacturing associations announced the launch of a new education and advocacy organization focused on bringing reform to that system – which continues to deny an adequate voice to more than 100-million retail investors in the United States with more than $16.9 trillion in assets.

As the size and influence of these massive institutional holders has grown, so too has their ability to drown-out the voices and interests of Main Street investors who, despite controlling the single largest pool of equity capital in the world, have no ability to influence the decisions these funds make on their behalf, with their money.

By investing through vehicles such as 401(k)s and mutual, index and exchange-traded funds, retail investors have lost the ability to exercise any meaningful influence or control over the way proxies act as stewards and managers of their money.

The Main Street Investors Coalition was created to raise investors’ awareness of how the system works and currently is being abused – and advance a reform agenda designed to help fix it. In addition to ACCF, the Coalition also includes the National Association of Manufacturers (NAM), the Equity Dealers of America, the Savings & Retirement Foundation and the Small Business & Entrepreneurship Council. Other organizations are expected to be added to the roster soon.

The Coalition will focus on advancing four key priorities over the next several months:

• Demanding that fund managers focus on maximizing performance – not playing politics with other people’s money;

• Ensuring that retail investors who own passive funds through 401(k)s have a say in how their shares are voted;

• Forcing third-party, “black-box” proxy-advisory firms to be more transparent about potential conflicts of interest; and

• Insisting that public pension funds meet the same basic regulatory and reporting standards as private pension funds

It’s time that someone stood up for the financial security of everyday, hardworking Americans.

The entire press release is worth a read, check it out here.

Also take a moment to review the Main Street Investors Coalition’s website found here.

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