Published
October 05, 2023
While the Securities and Exchange Commission (SEC) is active with a barrage of rulemaking, it's surprising they have yet to weigh in on a service popular with businesses and consumers alike—making electronic delivery (e-delivery) the industry standard for fund disclosures and communications.
Return to sender: Back in 2018, the Chamber backed the SEC's Rule 30e-3. This allowed investors to view shareholder reports and related documents online, rather than getting paper copies as the default option.
- Despite its obvious advantages—especially during the pandemic—the SEC reversed the e-delivery option in 2022.
Delayed delivery: Meanwhile, other agencies with oversight of retirement accounts have already adopted e-delivery as the default for communication, including the Social Security Administration, the U.S. Department of Labor, and the federal government's Thrift Savings Plan.
- The IRS has also embraced e-delivery and communication. According to the IRS, 94% of tax returns are e-filed, further showcasing how pivotal online platforms have become for essential tasks.
The benefits are clear: E-delivery is not just convenient but a necessary evolution in our digital age and a preferred choice among investors. A recent report reveals that 85% of retail investors are comfortable with e-delivery being the default method for investor communications, provided they can opt-in to paper delivery if desired.
There are several important benefits of e-delivery for today’s investors.
- E-delivery improves investor involvement with their savings. Online tools encourage active investment management, and digital access offers easily customizable, clear information.
- E-delivery cuts costs and boosts returns: Economic research shows $1 billion in cost savings from e-delivery would ultimately benefit investors through lower expenses and higher net investment returns.
- E-delivery is a better choice for protecting consumers. With a staggering 161% increase in mail theft complaints from March 2020 to February 2021, e-delivery proves a safer default option for consumers. Digital communications offer enhanced consumer protection compared to traditional mail methods.
- Paper preference protected: While e-delivery boasts undeniable benefits, some voice concerns over sidelining paper fans. Yet, for example, the Department of Labor assures the public that their recent e-delivery guidelines will not negatively affect those without web access.
- Congressional action: As the SEC hesitates, Congress needs to intervene. Improving Disclosure for Investors Act of 2023 (H.R. 1807) requires the SEC to move forward on a rulemaking that makes e-delivery the default for investor documents but keeps paper as a choice.
Bottom line: E-delivery would modernize investor communication and disclosure and should be at the top of the SEC’s rulemaking agenda.
About the authors
Kristen Malinconico
Kristen Malinconico is a Director for the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness. She leads the Center’s portfolios for asset management, derivatives, and fiduciary issues.
