Portfolio construction

Financial advisors’ critical role in helping investors select ETFs

January 30, 2025 - 6 min read

Senior Vice President, Head of Institutional Product and ETFs – Natixis Investment Managers – US Distribution

Investing in exchanged-traded funds (ETFs) can be a great way to diversify a portfolio, but with over 3,500 US domiciled ETFs to choose from, it can be difficult to find the most suitable one for individual investors. This is where a financial advisor can be helpful. Using the expertise of a financial advisor to research, select, invest, and monitor ETFs offers advantages that can enhance an investor's outcomes.

Financial advisors can provide personalized and strategic financial guidance.

The landscape of ETFs is ever-changing, with countless options spanning varying asset groups (equities, fixed income, alternatives); regions (U.S., developed, emerging markets); and styles (passive, smart beta¹, active).

A qualified financial advisor is aware of these choices and stays current on changes and best-in-class options, and can offer ETF ideas and asset allocation combinations that most investors may overlook. In other words, qualified financial advisors' expertise allows them to identify products that align with an investor's goals, risk tolerance, and time horizon, ensuring a personalized and strategic approach to ETF investing.

Financial advisors offer another critical benefit: Risk management.

Investing involves risk, but working with a financial advisor can help investors mitigate any potential downside. They employ cutting-edge approaches – and even in some cases, artificial intelligence-aided tools – to analyze implied volatility,² correlation with other ETFs, and overall portfolio risk when selecting ETFs for clients. They can suggest building a complete portfolio that blends various ETFs together to produce acceptable risk exposures that’s in line with return objectives and client preferences.

Advisors will pay close attention to fees and embedded costs.

While ETFs are generally known for having lower costs than mutual funds, there are still fees involved, including fund expense ratios and trading spread. A financial advisor can help analyze these costs and mitigate them. Beyond that, a financial advisor will know the most efficient way to trade ETFs to ensure optimal execution—which can include the time of day to trade, using limit orders and block trading large allocations.

The ability to research and discover strong portfolio management teams with proven records of solid relative performance is crucial to advisors when selecting ETFs.

A high-quality financial advisor has the know-how to conduct deep due diligence and identify top-tier ETFs. They home in on ETFs with successful and established portfolio managers, offered by reputable firms, and having a strong track record of outperformance, etc.

Of course, past performance is not a guarantee of future results, but being able to compare how various investment strategies have performed over time can offer valuable insights.

Investors can rely on financial advisors for guidance when markets get volatile and emotions run high.

For example, sharp market declines that are sensationalized on social media can tempt investors to make impulsive decisions, such as panic selling. A financial advisor provides an objective perspective and can help investors stay focused on their long-term goals – rather than reacting to short-term market movements. This disciplined approach can improve overall investment outcomes.

Finally, using a financial advisor can save investors time.

The efficiency of using a financial professional can potentially allow investors to spend more time focused on their career, leisure, or families. Researching and managing an investment portfolio requires a significant amount of time and expertise. By delegating this task to a professional, investors can free up their time to focus on other aspects of their lives, while having the confidence that their investments are being managed effectively.

Overall, leveraging a financial advisor to help select ETFs can provide several advantages to investors, including expert strategic advice, risk management, cost efficiency, portfolio manager selection, guidance amid market turmoil, and time savings. These benefits are a key reason why some U.S. investors choose to work with a financial advisor when building their investment portfolios. Working with an advisor to take a thoughtful approach to optimizing their ETF allocations can help clients maximize their probability of a successful financial future.

Natixis active ETFs

Find out how actively managed, bottom-up ETF strategies can help investors pursue growth opportunities and manage risk in all market environments.

Natixis Gateway Quality Income ETF GQI

Natixis Loomis Sayles Focused Growth ETF LSGR

Natixis Vaughan Nelson Select ETF VNSE

Learn more

Visit our ETF product page or contact your Natixis sales representative to learn more.

¹ Smart beta is an investment strategy that combines elements of both passive and active investing and typically includes factors such as growth or value when selecting investments for the strategy.

² Implied volatility is a measure of how much the market is expecting the price of a security to change over time.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, money market, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

Diversification does not guarantee a profit or protect against a loss.

This material is intended for informational purposes only, does not constitute investment advice and should not be construed as a recommendation for investment action. The information provided does not take into account the investment objectives, risk tolerance, restrictions, liquidity needs or other characteristics of any one particular investor.

This material does not constitute legal or tax advice. Investors should consult with their legal or tax advisors.

Exchange-traded funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than the ETF’s net asset value. Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Active ETFs: Unlike typical ETFs, there are no indexes that an active ETF attempts to track or replicate. Thus, the ability of an active ETF to achieve its objectives will depend on the effectiveness of the portfolio manager. Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns.

Derivatives are financial contracts such as options whose value is derived from an underlying asset such as a stock or bond. Derivatives involve risk of loss and may entail additional risks. Because derivatives depend on the performance of an underlying asset, they can be highly volatile and are subject to market and credit risks.

Before investing, carefully consider the fund’s investment objectives, risk, charges, and expenses. Visit im.natixis.com for a prospectus or a summary prospectus containing this and other information. Read it carefully before investing.

ALPS Distributors, Inc. is the distributor for the Natixis ETFs. Natixis Distribution, LLC is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, LLC.

Natixis Distribution, LLC (member FINRA | SIPC) is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers, LLC.

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