The Southern California Institute of Law has a bar passage rate of 7%, which means 93% of their graduates failed. They sued the California Bar on free speech grounds because they didn’t want to be forced to state that 7% amount in their materials. According to the law school, the bar passage rate is a meaningless statistic.
Of course, the only people who claim a statistic is meaningless are those that don’t do well in these statistics. Yes, I remember my issue with billable hours for law firm associates.
In the retirement plan industry, providers who don’t do well in specific instances will just dismiss their poor placement or lot as something meaningless. I remember hearing a financial advisor who lost a plan sponsor client to fiduciary heavyweight James Holland that ERISA 3(38) fiduciary services is just marketing. How many providers dismiss their client retention rate or claim that fees aren’t so important because they just want to hide the ball and/or the truth?
If a provider glosses over a specific statistic or dismisses a notion rather quickly, don’t take their word for it and find out why. Maybe the statistic really isn’t that meaningless and it’s relevant. Just don’t take the provider’s word for it.