Recent market corrections could benefit margin lending advisers, according to St George head of margin lending Andrew Black.
With mum and dad investors increasingly using margin lending to chase market returns, Black describes the recent corrections as a wake up call.
"A couple of per cent in the day are not big changes and it could wake some people up and drive some of the day traders back to getting advice," Black said.
"In a bull market people tend to move away from advisers, thinking anyone can do this, but the reality is once they get their fingers burnt they come back."
St George already has a course to help financial planners educate their clients but is looking at creating something similar for direct clients.
"There is clearly an underlying trend and a weighting towards direct investing, with less educated people making up a component of that market growth," Black said.
"It's not that they shouldn't be there, it's that they need to be diversified and not so aggressive."
According to Morningstar analyst Tim Murphy, the danger is that while information on the downside to margin lending is available, the implications are still not widely understood.
"The danger is that if there is a sharp downturn people who are leveraged up will get a margin call and there are still plenty out there who really don't understand what it is and how to deal with it," Murphy said.
"I don't think it is as well understood by the average punter as it should be. It's traditionally been the sophisticated investor that played in this space now it is the mums and dad who don't necessarily have a grasp of the structure."
