Seventy-eight percent of financial advisors say they plan to increase their use of exchange-traded funds (ETFs) in retail investors' portfolios next year, according to a survey by Guggenheim Investments, which queried financial advisors onsite at Morningstar's ETF Invest Conference in Chicago from October 3 through 5.

Guggenheim Investments itself is banking heavily on ETFs. The company on September 19 added six new exchange-traded bond funds to its existing lineup of advisor-focused, defined-maturity bond ETFs, which return principal to investors when the bond holdings mature. In 2010, it bought Rydex SGI, an investment management firm specializing risk management-oriented ETFs, as part of its purchase of Security Benefit.

Nearly three-quarters (71 percent) of the advisors who are bullish on ETFs listed the vehicles' convenience and liquidity as the biggest advantages in retail investor portfolios. Sixteen percent of financial advisors cited the products' low costs as their biggest advantage, and the remaining 13 percent said that the transparency and tax advantages were the biggest benefits of using fixed-income ETFs.

Among the more significant obstacles preventing greater adoption of bond ETFs by financial advisors is the market environment. Forty-one percent of advisors said that low interest rates are one of the reasons they have not adopted ETFs, followed by another 27 percent who said it was economic uncertainty. Credit risk, market volatility and potential tax changes are of lesser concern to advisors.

With the election less than two weeks away, advisors are concerned about the potential impact of the 2013 tax changes on investors' returns. According to survey respondents, 35 percent of financial advisors are helping their clients prepare by educating them about the tax implications to their portfolios.

Thirty-one percent of financial advisors say they'll wait to see what happens with the tax laws before making any changes to their clients' investments. The remaining advisor respondents are taking advantage of tax loss harvesting (13 percent), taking gains this year at a potentially lower rate (11 percent) or moving their clients into lower tax structured products (11 percent).

About 55 advisors out of the more than 200 financial advisors in attendance at the Morningstar conference were surveyed.

Guggenheim Investments is the investment management businesses of Guggenheim Partners.