Derman  while speaking on Volatility Smiles :

Academics in finance departments often think that options theory is a solved problem. In fact, 15 years after the appearance of the smile, we are still in many ways, like the smile, laughing in the dark. There are too many models.

When you do research in options, you have to use advanced mathematics. If you are a practitioner you must never forget that you are moving through lawless roads where the local inhabitants don’t respect your customs. All financial models are wrong, or at best hold only for a little while until people change their behavior.

I think our dream of a perfect replacement for Black-Scholes is only a dream. There isn’t a uniformly good model. Since Black-Scholes is the market’s language for quoting options prices,local volatility is a natural way to quote forward volatility in terms of the values of portfolios of options spreads, just as forward rates are a natural way to think about the future interest rates. Which model is right depends on your market.