Bayard "Bud" Bigelow III of The Cambridge Alliance LLC in Vermont, one of the leaders in advisors' errors and omissions insurance and a guru in helping advisors avoid and defend against investor claims, agrees that fund ignorance won't be bliss for practitioners. While he believes that fund managers and directors will be the first line of defendants in investor lawsuits, "burying your head is not a good option right now for advisors," Bigelow says. "That's essentially the major liability I see for advisors, when a public announcement is made about a fund family and an advisor doesn't act one way or another even though it affects clients. Of course, you could act too precipitously or not quickly enough. There are all kinds of ways to walk into trouble."

But there is also some room for advisors who are determined to engage in riskier investment activities, as long as the activities are above-board with clients. That even applies to market timing. "If you're determined to do market timing, my advice is use the funds that encourage it," says Schwartz. "It's also critical to make sure clients fully understand the market-timing strategies you follow and all the risks involved."

Active market timing may prove to be more costly to advisors and their clients as fallout from the fund scandals escalates. But other actions, or lack thereof, also can have dire consequences for advisors who have something to hide or lack the fundamental competence or will to help clients do the right thing.

In fact, having to backtrack on investment choices gives more than one advisor waking nightmares. "If I were a broker and sold Putnam and Janus and Strong and so on, it would just be terrible to apologize to clients and then watch them sustain tax losses to get out of the funds," says John LeBlanc, a principal of Back Bay Financial Group in Boston.

On the other hand, for advisors who put client interests first "this is a good thing," LeBlanc adds. "Advisors on the same side with their clients look like stars. Clients realize that we're doing the right thing for them."

That doesn't mean that LeBlanc, Low or other advisors profess to have a crystal ball when it comes to knowing which fund complex may fall next. Most experts agree that the end of the scandals is not yet in sight. To the contrary, better advisors are telling investors point blank that they can't know the future, they can only do their utmost due diligence to protect against known risks.

"Currently we do not hold client funds in any of the families that have been implicated except minimal amounts in Janus Funds, which are being liquidated as appropriate," Boone Financial Advisors of San Francisco wrote to clients in November. "Should any of the other fund companies we work with be implicated in these types of activities, we will carefully evaluate the circumstances and nature of the problems uncovered. Where there is evidence that the activities arise from a business culture that fails to adequately emphasize the fiduciary duty of the company, we will consider liquidating such holdings and finding more suitable investments."

What could be more clear than that? A little proactivity on advisor's parts can go even further. "We were able to communicate to clients that funds that we're using assured us that they weren't involved in any of these trading activities," says David Strege, a principal with Syverson, Strege, Sandager & Co. in West Des Moines, Iowa. "This gives us a chance to communicate to clients what is happening and what impact, if any, it has on them," Strege says.

It also gives advisors a chance to use the way they select funds, and the way they are selected by funds, as a badge of honor. For instance, LeBlanc says that 27% of the assets of his firm's clients are invested with Los Angeles-based DFA (Dimensional Fund Advisors) which, despite catering almost exclusively to institutional investors, forbids its clients from market timing its funds.

The historic events caused by fund trading abuses have another silver lining, beyond focusing investors' attention on seeking assistance. That silver lining is the klieg light that's being aimed at fund fees. "Going forward, there is absolutely no reason to think about investing in a fund that has [substantially] above-average fees," says Bullard.