Why do institutional investors rely on proxy advisors ?

Following are few reasons why institutional investors engage proxy advisors: Proxy advisors generally offer variety of services consisting of both, analysing the proposals at general meetings and recommending voting decisions. The recommendations of proxy advisors help the investors to obtain a more considered understanding of different agenda items and to arrive at an informed voting decision, allowing them to optimise their own limited resources and cast their votes in a timely and informed manner. The proxy advisors assist the institutional investors with informed knowledge of corporate governance, breaking the language barrier and providing a voting platform in a general meeting, wherever required, while investing across the globe. Proxy services firms play an important role in the proxy voting system. Such firms offer valuable services which includes analysing of the proposals for general meetings and providing voting recommendations, either based on the their own voting policy or on the investor's customised voting policy. Proxy advisers also influence boards' decision making. They do a good job of policing the boards and governance records of the firms they track, and nudging institutional investors to take a stand on governance issues.