I ran across a great term today: The Semmelweis Reflex. Unfortunately, this week, 90 deserving plan participants fell victim to this silent killer of their future net worth.
I’ve run into this many times in my career and it’s nice to put a name to it. It also makes me feel better that even though I tried to really help the person with whom I was working, I was unable to communicate effectively how their solution was flawed and that it could be improved. Now I know it was Semmelweis building a wall of futility around them despite my best efforts to educate and illuminate.
The Semmelweis reflex is the tendency to reject new evidence or new knowledge because it contradicts established norms, beliefs or paradigms. And it’s a damned strong reflex! It’s certainly understandable that after having held a certain belief for years or decades that something new or revolutionary could upset the balance of that belief system. But I’ve always believed that it’s appropriate and good to always be open to contrary opinions and give them consideration. Semmelweis believes otherwise.
So what happened this week? We were presenting to a 401(k) plan committee about some ideas that could dramatically improve their plan. They have an outdated plan full of expensive funds and our solution modernized the plan, provided more protection for the fiduciaries, and listed a lineup of funds with significantly higher Sharpe ratios and Morningstar ratings (yes, I know – I don’t use Morningstar to pick funds, but it illustrates a point). Even though the numbers were conclusive in supporting our case (and by a significant margin as well), the president of the company and one of his cronies flat out refused the evidence (It appeared that some other committee members were paying attention but we’ll see if this is company is an oligarchy or democracy).
Sure I’m bitter that we won’t get any revenue from this proposal, but that’s a drop in the bucket compared to ninety hard-working people that are stuck in this retirement plan from the Elizabethan age.
Sour grapes aside, I’m thankful for Semmelweis in one way. Right now, I can look at my practice and my clients and can say that I really like working with every single one of them. They’re a great group of really nice, genuine people. If Semmelweis hasn’t stepped in during some of my meetings with prospects, I would probably have a more challenging, argumentative relationship with those clients and be spending less time with the clients with whom I enjoy working.
Now that you’re aware of Semmelweis, maybe you’ll acknowledge if he starts to creep up on you in the future. If you’re unwilling or unable to see alternative viewpoints, how will you really be able to grow as a person?