It’s Time to Embrace e-Delivery to Meet Investors’ Needs for the 21st Century

Americans are online more than ever these days. New survey results show that most Americans with investment and savings accounts prefer accessing their investor documents electronically via e-delivery rather than through the postal system. However, the U.S. Securities and Exchange Commission (SEC) still requires default paper delivery for various investor documents including prospectuses, account statements, and trade confirmations. The time has come – and arguably is overdue – to implement electronic delivery as the primary means for delivering investor communications, while preserving the power to choose paper delivery if preferred.

Investors have spoken: New survey results show large majority of Americans are comfortable with e-delivery as default

Americans are online more than ever these days, including more than 93% of all adults, 96% of those between 50 and 64 years old, and 75% of those 65 years old and above. 95% file federal taxes electronically. And new survey results show that most Americans with investment and savings accounts prefer accessing their investor documents electronically via e-delivery rather than through the postal system. However, the U.S. Securities and Exchange Commission (SEC) still requires default paper delivery for various investor documents including prospectuses, account statements, and trade confirmations. The time has come – and arguably is overdue – to implement electronic delivery as the primary means for delivering investor communications, while preserving the power to choose paper delivery if preferred.

The survey – commissioned by SIFMA and conducted by YouGov – shows that a large majority of retail investors, regardless of income or age, want e-delivery for its environmental benefits, speed, and convenience.  Notably:

  • 85% are comfortable with default e-delivery for investor documents going forward provided they can still opt-in to paper delivery.
  • 79% have already chosen e-delivery for at least one type of investor document, including 75% aged 55 and older.
  • Only 8% want paper copies of all investor documents sent through the mail.

e-delivery generally refers to providing access to a customer’s account information and required disclosure documents through digital or electronic methods. For example, an investor receives an email or text alert from her brokerage firm notifying her that her documents are available on the firm’s secure website or mobile app with a link or instructions to log in to her password-protected account to view the documents.

e-delivery is safer and more timely than hard-copy mail delivery. e-delivery allows investors to review documents in more user-friendly formats, when and where they choose, leveraging modern communications technology to create deeper and more productive investor engagement. Investors also receive their communications much quicker and, therefore, can notify the firm if there is an error or other discrepancy much sooner than if those documents were received in the mail.

Seniors Are Key Part of Trend Toward e-Delivery

One of the primary arguments made in defense of the SEC’s paper-first rules is that retail investors, especially senior investors, prefer to receive regulatory documents from their brokerage or investment company in paper form through the postal system. However, the new survey results show the opposite to be true: investors 55 years and older are included in the large majority of retail investors who prefer to access their investor documents electronically via e-delivery rather than through the mail.

Older Americans leverage technology in all areas of their lives including related to financial documents– the Social Security Administration requires beneficiaries to access benefit statements online, and 50 million individuals have “my Social Security” online accounts. The U.S. Department of Labor (DOL) enabled default e-delivery of documents and disclosures to retirement plan participants in 2020.

In fact, in a 2022 report, the DOL found its new e-delivery rules are “unlikely to have any negative impact” on “individuals residing in rural and remote areas, seniors, and other populations that either lack access to web-based communications or who may only have access through public means” due to “the regulation’s specific safeguards against such impacts.”

Environmental Concerns a Key Reason Why Investors Prefer e-Delivery

It’s also important to look at why there is interest in e-delivery from such a broad swath of American investors.  The survey found:

  • 79% of individual investors say e-delivery is an easy way to cut their carbon footprint.
  • 7 in 10 (70%) agree COVID-19 related mail disruptions showed the importance of e-delivery.
  • Roughly half see speed (50%) and convenience (49%) as top benefits of e-delivery.

The environmental impacts from annual paper usage for financial statements are staggering.

More than 830 million pages of paper are used every year to print and mail prospectuses and shareholder reports to investors – just two of the many documents subject to the SEC’s default paper delivery rules. This requires cutting down 101,000 trees every year. Considering all stages of paper’s life cycle – from raw material extraction to disposal – this amount of paper usage has enormous environmental impacts.

These environmental impacts are the top reason why investors prefer e-delivery over paper. By promoting more efficient paper usage, e-delivery reduces major contributors to climate change including greenhouse gas emissions, landfill waste, deforestation, water and air pollution, and water, wood, and energy consumption.

Industry Roadmap

In September 2020, SIFMA and SIFMA AMG along with several other financial services trades outlined how and why the SEC should amend relevant investor communications rules to permit firms to shift the default delivery method from postal delivery to e-delivery (through email, via a firm’s mobile application or website, or by other means of electronic transmission available today or developed in the future).

The process is straightforward – following a one-year transition period, firms could begin providing access to required investor communications electronically to existing clients for whom the firms have email addresses or other means to provide notice electronically that documents are available. New clients would be informed that they will be enrolled in e-delivery if they provide an email or other e-delivery address at account opening, even if they complete a paper application, unless they elect otherwise. In all circumstances, investors who do not provide a means for receiving required disclosures via e-delivery would continue to receive paper delivery, and any investor could elect to receive paper delivery at any time.

Time for the SEC to Take Next Step

Historically, the SEC has led e-delivery adoption as part of its mission to protect investors. In the 1990s, the SEC became one of the first government agencies to modernize its rules requiring paper forms to be sent through the mail by issuing interpreting guidance to enable e-delivery. In 2005, 2007, and 2018, the SEC issued significant rule changes that enabled default e-delivery for several types of disclosures and ensured investors can choose paper delivery if they prefer.  And in his 2020 confirmation hearing, SEC Chair Gensler committed to prioritize the expansion of e-delivery and the elimination of paper.

When the SEC opened the door to electronic delivery 25 years ago, it started an evolutionary process driven by technological development that created a new paradigm in investor communications. If the SEC lifts today’s regulatory barriers, it similarly will foster the next evolution in the quality of investor communications and engagement. The logical and natural next step is for the SEC to review its rules on the delivery of investor communications and foster an e-delivery framework suitable for the 21st century.

Kenneth E. Bentsen, Jr. is president and chief executive officer of the Securities Industry and Financial Markets Association (SIFMA) and chair of the International Council of Securities Associations (ICSA).

 

Additional Key Findings and Survey Information

A large majority (81%) would prefer that at least one type of investor communication be sent via e-delivery than having them physically mailed:

  • For all types of communications, only half of investors prefer paper delivery: Annual privacy policy (23%); Trade confirmations (28%); Notice, amendments, and other important account updates (29%); Research and planning education materials (24%); Reports, prospectuses, and other proxy materials (28%); Monthly or quarterly account statements (35%); Legal notices (37%); Tax forms (44%).
  • Only 8% say they would prefer to receive all individual investor communications through physical mail.

The majority (79%) of investors have already opted in to receive investor communications electronically, either through email, a financial institution’s website, or a mobile app.

  • Regardless of age, a majority receive investor communications electronically (82% of 18-34, 83% of 35-54, and 75% of 55+).
  • Broken down by e-delivery method, 47% of investors already access to their documents through email, 46% through their account provider’s website, and 21% through a financial institution’s mobile app.

Comfort with e-delivery as the default is high regardless of age, education level, income level, and amount of assets held.

  • Three in four individual investors (75%) would be comfortable with e-delivery as the default method for individual investor communications going forward.
  • 7 in 10 (71%) agree that the benefits of e-delivery becoming the default outweigh any concerns they would have.

Comfort with e-delivery as the default method is high even among older individual investors.

  • Over two-thirds of those aged 55-64 and those aged 65-74 are comfortable with e-delivery as the default (68% for both age segments).
  • 50% of those aged 75+ are also comfortable, with 42% uncomfortable.

While 22% are initially uncomfortable with e-delivery becoming the default, this drops to only 15% when individual investors learn they could still opt-in to paper delivery.

Individual investors get caught up in cumbersome rules and interfaces for signing up for e-delivery. Over a quarter (27%) who do not receive e-delivery currently say they’ve signed up but still receive paper documents.

  • 42% of all investors say they receive paper documents in the mail now but would prefer to receive them all

Individual investors who have already signed up for e-delivery are satisfied. 

  • 88% who have opted in say they are satisfied with their e-delivery statements.

 

 

About this survey

YouGov conducted an online survey of 1,312 individual investors nationwide between May 16th and May 19th, 2022. The individual investors surveyed hold at least $5,000 across retirement accounts, college-savings investments, stocks, bonds, mutual funds, or a brokerage account, excluding property and cryptocurrency investments.