Mutual Fund Reform May Elude Congress

Siedle says his estimate comes from totaling up the spending practices of the fund industry, particularly marketing costs that are paid for by commissions.

"The lion's share of money managers' commissions go for marketing," he says. "If that was abolished, that would require a radical rethinking of how mutual funds were marketed."

He says the use of soft dollars, in which money managers essentially use client assets to pay for independent research, is only one area where investors are abused without their knowledge. Even if they know commissions are used for research, there's no way for the individual investor to accurately compute their costs.

"There's no disclosure of the extent to which soft dollars are reducing your return," he says.

He also said retail investors pay disproportionately higher fees, sometimes twice as much as large institutional investors such as pension funds. After adding his estimates together, he says he'll be making the figure part of the public record for the first time.

"Nobody's ever put a figure on it so that people really understand the impact on the nation's savers," he says. "For many, that's the difference between a comfortable retirement or being elderly and impoverished, bagging groceries at the local supermarket."