Recently a business owner asked me to review his investment portfolio. He is currently with an Ameriprise financial advisor and his gut feeling tells him something is amiss.

He is paying the advisor 1.6% in fees. First of all, this fee is quite exorbitant. For the size of his portfolio, he shouldn’t be paying more than 1% in advisor fees.

Adding insult to injury, for the fee that he is charging, this advisor puts his money into a collection of very expensive mutual funds like ODMAX.

It is very easy to check the expenses of a mutual fund. I just googled ODMAX and I found out it has a load of 5.75% and an expense ratio of 1.36%. (For those who don’t know, load is a one time charge to pay commision to the Ameriprise advisor who doubles as a broker. Expense ratio is an ongoing annual charge.)

ODMAX is a mutual fund that invests in emerging market stocks. If you use the low cost alternative, aka a Vanguard fund, you will pay no load and the expense ratio is only 0.33%, a saving of 1.06%.

Don’t ever underestimate these tiny savings. Because in ten years, the savings will be more than 10%, in twenty years, more than 20%. This businessman is in his 50s; he can easily live another 30 years. I asked him: “How would you like to be more than 30% poorer in retirement?” That is exactly what this financial advisor will make him.

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I encouraged this businessman to bring the issue up with his Ameriprise financial advisor. The advisor told him there are many factors in picking a fund, and he considers all of those factors, not just investment expenses.

This is typical Wall Street bullshit. Morningstar already has research out that states that if there is one factor that determines future returns, it is investment expense.

The problem with Wall Street financial advisors, be they with Morgan Stanley, Merrill Lynch or Ameriprise is this: they have a huge conflict of interest. These firms (their employers) do not exist to help you secure your retirement despite what their formidable advertisements might tell you. They exist to maximize profits on your back. That’s why it is not hard to find these types of exorbitant fees in portfolios managed by these financial advisors.

If you have such a financial advisor, what can you do? Well, it’s very simple, fire him!

If you really like the guy, like he plays golf with you every Sunday, then at the very least you should Google the funds in your portfolio to find out how much you are paying in loads and expenses. Then tell you financial advisor, you only want to be in no-load funds with expense ratios less than 0.5%.