Some days, in my own small way, I feel as though I might get an inkling of what Ignaz Semmelweis must have felt. Semmelweis was a physician who merely wanted what was best for his profession and endured a great deal of criticism for pointing out that the status quo was misguided. He was no heretic; he was an iconoclast. There’s a big difference.
All Ignaz Semmelweis ever wanted was for the medical profession to take a careful look at the evidence that washing up before surgery could save lives. Despite considerable evidence to support his theory, his peers roundly pilloried him on the grounds that no self-respecting physician would ever knowingly do harm to a patient, what with having taken the Hippocratic Oath and all.
It is now considered possible that millions of people may have died unnecessarily because of the medical community’s stubborn rejection of the Semmelweis thesis. What is self-evident today was considered heretical when first posited. For decades, physicians and surgeons simply refused to accept any responsibility for contributing to the problem. In fact, they were affronted by the thesis and turned Semmelweis into a pariah for having the audacity to suggest it. Semmelweis was right, of course, but he suffered enormous personal persecution for his ideas and died at an early age in an asylum, penniless.
The point I have been making for about 20 years now is that financial advisors can do better – and that it behooves them to try. Alas, some people make up false motives for my crusade because they refuse to engage in purposeful self-reflection regarding their own conduct. Many simply deny that the way they go about business is unwittingly harmful to their clients. As the saying goes, “If it ain’t broke, don’t fix it”. Denial of culpability leads to deliberate inaction that protects the status quo and all it represents.
Similarly, if “it” is broke, but no one in the outside world knows it, the natural tendency might be to hide the evidence to keep it that way. Public ignorance of the risks associated with how things are done, such as the potentially harmful impact of the pervasive advisor bias toward optimism. I call this bias “Bullshift”. It’s not evil. It’s not nefarious. It’s human – maybe even normal. My point, above all else, is that it is. Denying the bias is no way to solve the problem it represents. We can all learn from the Semmelweis morality tale of human hubris and professional overconfidence. The question is: will we?