It's an all too common problem: chaotic, directionless new client portfolios.

“They can be way overweight in some areas, like domestic large-cap, or underweight in others, like small-cap or global,” says Michael Schultz, investment manager and research analyst at Badgley Phelps Investment Managers in Seattle. Fixing those problems and adjusting the portfolio to reflect his firm’s own investment approach can take time, he adds.

However, using some basic ETFs to fill gaps in the portfolio can be an efficient and inexpensive way to right a portfolio quickly, Schultz says.

“ETFs in this situation can be used as a transition vehicle,” says Timothy Thomas, director of research and investment manager at Badgley Phelps. “With a new client transition, we try to balance out tax consequences and risks, while looking for missed opportunities in the portfolio."

Vanguard suggests a similar strategy of using ETFs to transition a new client’s portfolio.

As the company explains to advisors on its website: “New clients may have gaps in their existing portfolios, such as little or no exposure to certain asset classes, market segments or sectors. Wholesale rebalancing to diversify the portfolio or transitioning into a model portfolio may not be possible because of trading restrictions, tax consequences or other issues. In these cases, ETFs can be used to fill those gaps until you can rebalance the portfolio to the client's desired allocation.”

The idea at the center of these techniques is portfolio completion.

“Say your new client has all large-cap exposure. He should have some small-cap exposure, and a great way to quickly and cheaply plug a space that’s empty is with a small-cap index fund ETF,” says Jim Rowley, senior investment analyst in Vanguard’s investment strategy group. Rowley also notes advisors who find themselves strapped for time can add a small-cap ETF to avoid the due diligence of selecting small-cap stocks individually.

Schultz says advisors should consider simple index ETFs when transitioning a client portfolio. “We’re not big fans of leveraged ETFs and other ETF products. When were in a transition situation with a new client’s portfolio, what we’re just trying to capture is market returns,” he says.

And in some instances, advisors can provide an escape route when existing clients aren't happy with their small-cap managers: "They can go with a small-cap ETF in the portfolio while looking for a new active manager," says Rowley.