How exactly is this true? I encrypt my phone's hard disk and I encrypt all of my SMS communications (locally) with https://play.google.com/store/apps/details?id=org.thoughtcri...
It's no harder than if someone steals your laptop. The same measures you would use on a laptop (FDE, TLS) are available on phones. The argument can certainly be made that SMS is an insecure form of 2-factor auth, since they can be easily intercepted in transport (though if you use TextSecure someone who steals your phone can't get them!), but that's why we have the google authenticator app.