Administrations of both parties have tried -- and failed -- for years to end the scourge of needless government paperwork mandated by outdated laws and regulations. While President Trump has already made numerous strides to modernize government and reduce the presence of such paperwork in our lives, there is still a lot of work left to do.
Most recently, the Social Security Administration announced that because of a Trump executive order, paper benefit checks will soon be phased out in favor of direct deposit. The same will be true of other government payments. President Trump has also directed the Federal Register to streamline its publications of new rules and has issued executive orders requiring that ten regulations be eliminated for every new one. There is now electronic delivery for Social Security, 401(k), and federal employee retirement statements. This fall, the Office of Management and Budget eliminated dozens of redundant recordkeeping requirements for federal contractors.
We increasingly see the advantages of electronic delivery in the tax field. As taxpayers age and become more economically complex, they begin to acquire a dizzying alphabet soup of W-2s, 1099s, 1098s, 5498s, K-1s, and the like. Most of these are delivered online as PDFs, where they can be easily and securely shared in a portal with your CPA, EA, or other tax professional. One day, advisers will hopefully be able to centrally access all of these documents at tax time, but we're a long way off from that.
These measures help American businesses and families more efficiently tackle their daily to-do lists and cut one of the worst types of red tape -- unnecessary paperwork. They are a tangible reduction in the cost of government, akin to a tax cut that loses no money for the federal Treasury.
There's an obvious way for the Securities and Exchange Commission (SEC) to join the government's digitization efforts and help tens of millions of investors achieve a more secure, efficient, and seamless investing experience. Because certain rules haven't been updated for years, the SEC still requires brokerage firms to mail millions of paper documents (830 million sheets of paper each year) to their customers by default unless the client has affirmatively opted into electronic delivery.
This outdated practice is, among other things, unsafe. Between 2019 and 2022, there was an 87 percent spike in mail theft (a leading contributor to ID theft), according to the U.S. Postal Service. If you've ever discovered that someone opened an account in your name and went on a shopping spree thousands of miles from your home, there's a good chance that mail theft was the fraudster's tool of choice for stealing your identity. Electronic delivery, meanwhile, provides important investor documents immediately and behind a secure online firewall. The less sensitive material that is shipped around the country and easily accessible for bad actors, the better.
Meanwhile, trading on apps and online is now instant -- stock and ETF trades happen in minutes, and mutual fund trades settle at the end of the business day. It makes no sense to receive trade confirmations a week later by mail, nor to receive quarterly reports just as easily generated in real time online. Under Paul Atkins's leadership, the SEC can and should adjust outdated regulations to make e-delivery the default for investor communications. In a recent CNBC interview, Chairman Atkins said, "It's a good time to look at the whole panoply of ways that people get information, how it's disseminated and what's fit for purpose." Hear, hear! Congress thinks so too, but in the interest of further efficiency, the SEC already has the authority it needs to make the relevant rule changes and should move forward on its own.
As the federal government steams ahead with digitizing payments and government retirement account statements, as well as other paper reduction efforts, it would be a travesty not to include the critical investment documents that millions of Americans rely upon to secure their financial futures. The SEC should act now to default the delivery of investment documents from paper to electronic and do its part to support the Trump administration's digitization goals.