If you've been looking for the hands-down, undisputed champ of mutual funds, then look no further than the Legg Mason Value Trust fund, which has beaten the S&P 500 index for a record 11 years running. You likely won't find it in your portfolio, however. Sure, the Legg Mason fund boasts an impressive 18.24% average annual return since its inception almost 20 years ago. But it hasn't made a lot of friends in the financial planning community. And it probably never will--at least not as long as the fund's trailer fee remains at a paltry 0.25%.

A trailer fee is the commission that mutual fund companies pay fund sellers to entice investors into buying their products. It can often go as high as 1% annually for every dollar you have invested for as long as you hold the fund (regardless of how well the fund performs). Because Legg Mason pays just a fraction of what most funds dish out in trailer fees, it's no wonder that this RRSP season most financial advisers will be steering their clients to more, um, rewarding investments. "In all the portfolios I've seen, I've never seen somebody owning that fund," says Adrian Leemhuis, president of ASL Direct, a Toronto-based mutual fund broker. "So by definition people are overpaying someone to underperform the market."

Actually, Leemhuis is that rare sort of broker who is more than happy to recommend the Legg Mason fund--or any other he feels would be a good investment for his clients--regardless of the trailer fee. That's because he's got a whole different spin on the mutual fund game. Leemhuis is looking to revolutionize Canada's $430-billion mutual fund industry by refunding trailer fees to investors.

That may not sound too revolutionary at first. But of the 50,000-plus licensed mutual fund representatives in Canada (even insurance companies like State Farm are getting into the act), Leemhuis is the only one doing it. Not surprising when you consider the kind of remuneration those trailer fees bring in. But there's more to it than just a few extra bucks going back to investors each quarter rather than into their financial planner's BMW fund. It might just be a better way to invest. "Trailer fees create a borderline conflict of interest," explains Ryan Lausman, a consultant with The Taddingstone Consulting Group Inc. in Toronto. "It's a retention payment so it encourages planners to keep investors in the fund. And they may be recommending funds where they get the highest trailer fee."

Not all financial planners are unscrupulous, of course--though it's a well-known secret that brokers in larger corporations are under intense pressure to generate fees for their firm. "I can always tell by looking at a client's portfolio which brokerage firm they're coming from," says Leemhuis. "And I can tell how long the guy's had it with them based on which funds are in there. Obviously they're saying, 'C'mon, guys, everybody sell this.'"

Certainly, if you're happy with your financial planner or broker, then you probably don't need to consider switching, says Duff Young, CEO of FundMonitor.com, a Toronto-based mutual fund research firm. "As an investor, all you care about is getting good funds," he says. "If you're paying for service, then you should get good service. You don't want to pay too much, but you don't want shitty service either."

A measly 1% trailer fee a year may not seem like a lot to pay your broker, particularly when it usually makes up less than half of a fund's management expense ratio (MER). "It's kind of like a $50 rebate at Gucci's," says Young. On a $50,000 investment, for instance, you're only looking at $500 a year. But compound that over a couple of decades of retirement investing and it sure can add up. If you put that $50,000 into a mutual fund with an average return of 10% annually, after 25 years that 1% trailer fee works out to an extra $100,000. "Nobody tells you you're going to have to work an extra five years to pay for their services," says Leemhuis. "But that's what we're talking about here."

Of course, buying from ASL Direct isn't free either, but it is pretty cheap. There's a flat monthly fee of $29.99, which is income tax deductible. Buying and selling funds, meanwhile, will set you back $10 a trade. In exchange, Leemhuis and his team provide full-service investing advice, whether you keep the trailer fees or roll them back into your portfolio. "I have a lot of clients with seven-figure portfolios who are getting back $5,000 a quarter," says Leemhuis.

For now, ASL Direct is licensed to sell funds only in Ontario. But Leemhuis says he expects to be open for business soon in BC and Alberta (although not in time for this year's RRSP season, unfortunately) and nationwide sometime in the near future. Of course, you'll have to watch vigilantly for ASL Direct's arrival in your neck of the woods. Because you can bet you won't be hearing a peep about it from your financial planner.