What should you tell your clients about the unfolding mutual fund trading scandals? Should you change the way you do business? Here is my best thinking, along with specific recommendations for practice management and client communications.

For most Americans, the mutual fund scandals were a modestly important story until the last week in October. Then, two developments made the story look bigger and uglier on Main Street while changing the mood of media coverage from annoyed to hostile. One development involved insider trading among portfolio managers at Putnam. Another revealed trading duplicity at the very top of Strong Funds.

But even as media analysts and editorial writers demanded reform, they often endorsed the continuing value of mutual funds. The New York Times lead editorial of October 30 was typical, concluding: "Many investors are undoubtedly shocked by these revelations of what amounts to insider skimming of their retirement savings, but they should not be panicked into putting their money under their mattresses. Mutual funds remain the best way for individuals to invest in the stock market."