Proxy Voting: RIA Requirements (SEC 206(4)-6)

If your RIA has proxy voting authority for client securities, SEC Rule 206(4)-6 requires you to (1) adopt and implement written proxy voting policies reasonably designed to vote in clients’ best interests, and (2) provide disclosures describing those policies and how clients can obtain voting information. Your job is to build a controlled, documented voting workflow with conflict management and retrievable records. ¹

Key takeaways:

• Written proxy voting policies must be operational, not generic, and must address conflicts and how votes are determined. ¹
• Client disclosures must explain both your proxy voting policies and how clients can request voting information. ¹
• Exams will test implementation reality: evidence of oversight, exceptions, conflicts, and the ability to produce voting records quickly. ^{1 2}

“Proxy voting: RIA requirements (SEC 206(4)-6) requirement” becomes real the moment your advisory agreements, account documentation, or operations model gives you the power to vote client proxies. The SEC’s proxy voting rule is short, but it drives a full operational program: documented decision rules, conflict identification and escalation, oversight of any third party proxy service provider, and a client-facing disclosure and request process. ¹

For a CCO or GRC lead, the fastest path is to treat proxy voting as a controlled production process, similar to trading operations: define who has authority, standardize how decisions are made, log what happened, and prove you acted in the client’s best interest. If you use a third party proxy voting platform or research provider, your policies still need to show what you do (and review) versus what you outsource. ¹

This page translates the rule into an implementable checklist, the artifacts to retain, exam questions you should rehearse, and a practical execution plan you can start immediately. Daydream can help by turning the requirement into a mapped set of tasks, owners, evidence requests, and review checkpoints so you can run proxy voting like an auditable control environment.

Regulatory text

Rule requirement (operational paraphrase): An investment adviser with proxy voting authority must adopt and implement written policies and procedures reasonably designed to ensure proxies are voted in the client’s best interest. The adviser must also disclose to clients (i) how they may obtain information about how the adviser voted their proxies, and (ii) a description of the adviser’s proxy voting policies and procedures. ¹

What this means for operators

• “Adopt and implement” means the document must match actual workflow, roles, systems, and escalation paths. If your operations can’t follow it on a random Tuesday, it is not implemented. ¹
• “Reasonably designed” means you should be able to explain why the controls you chose are appropriate given your strategies, client types, conflicts profile, and use of third parties. ¹
• “Disclose” means clients get a usable description (typically via Form ADV and/or client materials) and a workable process to request voting information. ¹

Plain-English interpretation

If you can vote client proxies, you must have a written playbook for how votes are decided and how conflicts are handled, you must follow that playbook, and you must be ready to tell clients (a) what your playbook is and (b) how to get information about how their proxies were voted. ¹

Who it applies to (entity and operational context)

Applies to:

• SEC-registered (and generally all) investment advisers that have proxy voting authority for client accounts. ¹

Common operational triggers:

• Your advisory agreement gives discretionary authority that includes proxy voting.
• Clients delegate proxy voting to you through custodian/platform elections.
• You vote proxies for pooled vehicles you advise where voting is part of the adviser’s authority.

If you do not have proxy voting authority (clients vote directly, or authority is explicitly retained by the client), you still want documentation that states that fact and explains how you prevent accidental voting.

What you actually need to do (step-by-step)

1) Confirm scope and authority

1. Inventory account types and governing documents to confirm where you have proxy voting authority (and where you do not). ¹
2. Map the “proxy chain”: custodian, platform, issuer communications, any third party proxy service provider, and internal reviewers.
3. Document the boundary: which securities, which strategies, and which entity votes (adviser vs affiliated manager).

Operator tip: Exams often start by reconciling “we don’t vote proxies” against custody/platform settings that show someone is receiving ballots. If you disclaim authority, verify the operational reality matches.

2) Write proxy voting policies that can run in production

Your written policies should cover, at minimum:

• Voting objective standard: a clear statement that votes are cast in clients’ best interests. ¹
• Decision methodology: how you decide votes (internal guidelines, use of third party research, factors considered, how you handle routine vs contentious items).
• Conflict of interest framework: how you identify conflicts (issuer relationships, affiliates, personal relationships, business incentives), what gets escalated, and who makes the final call when conflicted. ¹
• Client instructions and restrictions: how you implement client-specific voting guidelines, including how you code restrictions into the proxy voting platform or workflow.
• Exception handling: how you handle late ballots, missing information, share blocking, recalls, or operational failures.
• Oversight and review cadence: periodic testing of whether voting matched policy, and review of third party involvement.

Minimum viable policy test: Pick three real proxy items you voted (or would vote) and confirm the policy tells an analyst exactly what to do and how to document it.

3) Implement a controlled workflow (people, process, system)

Build the workflow as a set of controls:

1. Ballot intake and logging: ensure every ballot is captured (custodian feed / proxy platform / manual notices), assigned an owner, and tracked to completion.
2. Pre-vote conflict check: a required step to flag conflicts before casting the vote.
3. Vote decision and rationale capture: for non-routine items, record a short rationale tied to policy criteria.
4. Approval and segregation: define who can submit votes, who can approve exceptions, and who can override defaults.
5. Post-vote reconciliation: confirm votes submitted match votes recorded, and investigate breaks.

If a third party proxy voting service provider is involved, treat them like a critical third party:

• define what they do (research, recommendations, vote execution),
• define what you review (sampling, exception review, conflicts, alignment to your policy),
• and define how you evidence oversight. ¹

4) Deliver client disclosures and a request process

You must disclose:

• How clients can obtain voting information (a clear request channel, what information you provide, and how you authenticate the requester). ¹
• A description of your proxy voting policies and procedures (where it is found, how it is updated, and how clients can obtain a copy). ¹

Operationalize this with:

• a standard email/portal request path (monitored mailbox or ticket queue),
• an intake script (client name, account, time period, what they want),
• fulfillment SLAs (your internal target),
• and retention of the request and response package.

5) Create an exam-ready evidence pack

Even though the rule text is short, the exam expectation is “show me” implementation. The SEC’s exam priorities signal continuing focus on adviser compliance programs and how policies function in practice. ²

Build a standing “proxy voting binder” (digital folder) that is always current.

Required evidence and artifacts to retain

Keep artifacts in a retrievable format and tie them to your written policy sections.

Core governance

• Board/management approval (if applicable) or CCO approval record of proxy voting policy version history
• Role/authority matrix: who can decide, submit, approve, override

Operational records

• Ballot log (received, due date, voted date/time, submitted by)
• Vote confirmations or platform reports showing votes cast
• Rationale memos for non-routine or high-scrutiny items
• Conflict checks and conflict resolution documentation (including escalation outcomes)
• Exception log (late votes, overrides, operational breaks) with remediation notes

Third party oversight (if used)

• Due diligence file for the proxy voting service provider (scope, controls, conflicts approach)
• Periodic oversight evidence (sampling review results, exception review, documented follow-ups)

Client-facing

• Disclosure language (where provided to clients)
• Client requests for proxy voting information and your responses
• Copies of proxy voting policies provided upon request

Daydream practical note: Many teams fail here because evidence is scattered across email, the proxy platform, and ad hoc spreadsheets. Daydream can centralize the checklist, evidence requests, and reviewer sign-offs so you can produce a coherent response package without a scramble.

Common exam/audit questions and hangups

Expect questions in these categories:

• Authority and scope: “Which accounts do you vote proxies for? Show the population and how you know it is complete.” ¹
• Policy-to-practice: “Walk me through a recent vote from ballot receipt to submission. Where is the rationale documented?”
• Conflicts: “How do you identify conflicts before voting? Show an example where you escalated or deviated from a recommendation.” ¹
• Third party reliance: “What is your oversight of your proxy voting service provider? How do you know votes align to your policy?”
• Client disclosure and fulfillment: “Where do you disclose the proxy voting policy and the process to request voting information? Show recent requests and responses.” ¹

Hangups that slow responses:

• Inability to produce a complete vote history for a given client/account.
• Generic policy language that doesn’t match the proxy platform’s actual settings (default voting, overrides).
• No documented conflict checks beyond “we didn’t have any.”

Frequent implementation mistakes (and how to avoid them)

1. Mistake: Copy-paste proxy voting policy that never gets used.
   Fix: Build the policy from the workflow you actually run, then test it against real ballots.

2. Mistake: Treating third party recommendations as a substitute for fiduciary judgment.
   Fix: Document your criteria for adopting recommendations, when you review exceptions, and who approves overrides. ¹

3. Mistake: No defined method to handle conflicts.
   Fix: Put a conflict decision tree in the policy: identify, escalate, resolve, document.

4. Mistake: Client disclosures exist, but the request process is not operational.
   Fix: Create a monitored intake channel, ticketing, a response template, and a retention step. ¹

5. Mistake: Records exist but are not retrievable.
   Fix: Standardize naming conventions, store platform exports, and keep a single index that links ballots to rationales and conflicts.

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement, so this page does not cite specific actions.

Risk still concentrates in predictable places:

• Fiduciary risk: proxy voting is a client right that you exercise on their behalf; weak controls create best-interest and conflicts exposure. ¹
• Disclosure risk: failing to clearly describe policies or fulfill information requests creates examination deficiencies and remediation burden. ¹
• Operational risk: missed ballots and undocumented overrides are hard to defend after the fact.

Practical 30/60/90-day execution plan

Use phased workstreams rather than calendar promises.

First 30 days (stabilize scope + minimum controls)

• Confirm whether you have proxy voting authority by account type and document the conclusion. ¹
• Identify all systems and third parties involved in receiving and voting proxies.
• Draft or refresh the proxy voting policy with conflict escalation and exception handling.
• Stand up a ballot log and a conflict check step, even if manual.

Days 31–60 (operationalize + disclosures)

• Implement the full workflow (intake, decisioning, approvals, submissions, reconciliation).
• Align proxy platform configuration to policy (defaults, overrides, permissions).
• Publish/refresh client disclosures describing the policies and how to obtain voting information. ¹
• Create client request intake/fulfillment templates and retention steps.

Days 61–90 (test + evidence hardening)

• Run a control test: sample votes, verify rationales/conflict checks exist, reconcile to platform reports.
• Add an exceptions register and remediation playbook.
• Document third party oversight routines and keep evidence of reviews.
• Build an exam-ready evidence pack with a single index and current versions.

Daydream fit: This is a classic “policy + workflow + evidence” requirement. Daydream can track owners, version control, evidence collection, and periodic review tasks so proxy voting compliance doesn’t depend on one person’s inbox.

Frequently Asked Questions

Do we need a proxy voting policy if clients vote their own proxies?

If you truly lack proxy voting authority, Rule 206(4)-6 applies to advisers “with proxy voting authority.” ¹ Document the no-authority position and confirm custodians/platforms are set so ballots go to clients, not your firm.

Can we rely on a third party proxy advisory firm’s recommendations?

You can incorporate third party research, but you still must adopt and implement policies reasonably designed to vote in clients’ best interests. ¹ Document when you follow recommendations, when you review, and how you handle conflicts and exceptions.

What disclosures are mandatory under the rule?

You must disclose how clients may obtain information on how you voted their proxies and describe your proxy voting policies and procedures. ¹ Make the disclosure actionable by naming the request channel and what the client will receive.

What’s the minimum record set we should be able to produce in an exam?

Be able to produce your written proxy voting policy, proof it was implemented (vote reports/logs), conflict reviews, and the client disclosure/request process artifacts. ¹ Examiners typically ask for a sample of votes with supporting rationale and approvals.

How do we handle client-specific voting instructions?

Your policy should describe how you intake client instructions, encode them into the voting process, and prevent overrides without approval. ¹ Keep a record linking each restriction to the accounts it affects and evidence it was applied.

We rarely vote proxies. Do we still need the full program?

If you have proxy voting authority, the rule still requires written policies, implementation, and client disclosures. ¹ Scale the workflow to your volume, but keep the same control points: scope, conflicts, decisioning, and retrievable records.

Footnotes

1. 17 CFR 275.206(4)-6

2. 2025-exam-priorities