The Case for Keeping Some Friction in Travel

Last month, the United States SEC eliminated the Pattern Day Trader rule, a 25-year-old regulation requiring $25,000 in equity to actively day-trade, a threshold that existed because the dot-com crash had wiped out enough retail investors that the government put up a guardrail. 

Robinhood’s stock jumped 10%, and the market cheered. Robinhood had already shown the risks when you remove every friction between a person and a financial instrument they don’t understand: a 20-year-old novice trader killed himself in 2020 because he incorrectly thought he’d lost $730,000.

The wealth advisory industry, which charges a percentage of assets to slow you down before you do something irreversible, grew steadily throughout the fintech era. People will pay for friction when the stakes are high enough.

It’s a mistake to treat friction as uniformly negative. As fintech has learned, friction is not one thing, and removing the wrong kind can be worse than no