Licensing authorities provide a variety of functions in order to maintain both their validity and their value. It is when they deviate from either — or both — that the opportunity for disruption arises, even in the financial space.
I am a huge fan of James Bond and fascinated by the “License to Kill” he carries! Bond’s ability to maintain order amongst anarchy seemed to both validate and create value for the existence of his “license.”
When you contrast this example to “The Bourne Identity,” you start to see the questionable nature of validity. Think about the numerous “free agents” used to track down and “neutralize” Jason Bourne. You may begin to wonder about what “licensing” someone like Bond is really meant to achieve!
If you can extend this thought process to the licensing of taxis, you start to see why the Uber model attacked not just the profession, but the very act of “licensing” that municipalities hold dear. Safety, pricing, training and other value-drivers didn’t seem to resonate with the public, as more people increasingly drifted to the ride-sharing model.
And then came a more interesting development with Uber’s use of “surge pricing,” which adjusts prices in response to demand. This shift is very much akin to price discovery that happens in a marketplace, making it dynamic and self-adjusting. The exchange of the future is here with surge-pricing for ride-sharing apps.
Licensed brokers or financial advisers, already under threat from the robos, seem to be spiraling in this path of trying to demonstrate the validity and value of their licenses. Some interesting commercials even reference the fact that “the world is changing” and old models are no longer valid.
Do you think that licensed brokers will be the next to go, following suit of licensed taxi drivers? If so, then, how do you see the evolution of the financial adviser industry?