Are you paying too much for that index fund?

NEW YORK (CNNMoney.com) -- Investors who rely on a broker to recommend an index mutual fund could be paying a whole lot more that they have to, according to a study released Thursday.

The study, produced by the Zero Alpha Group, a network of financial advisory firms, and Fund Democracy, an advocacy group for mutual fund shareholders, contends that investors that use a broker are typically sold index funds with higher operating expenses, without necessarily offering a performance premium.

"Brokers are supposed to work for their clients, but when recommending a generic product such as an index fund, they refer their clients to more expensive funds and then collect sales charges to boot," said Mercer Bullard, president of Fund Democracy and a professor at the University of Mississippi School of Law.

The findings of the report, which was based on 141 virtually identical S&P 500 index funds, revealed that investors in broker-sold load index funds, which usually include a sales charge, can be three times the amount paid by investors in a no-load, or no sales fee index fund. And that's even before broker's fees kick in.

For example, the average investor putting $10,000 in a no-load index fund that earns an annual return of 10 percent would pay roughly $2,600 in fees over 20 years, the study authors contend. That same investor who opts for a load index fund through a broker would pay approximately $7,600 over the same time period.

Fund fees typically depend on a number of factors including how big the fund is, or the amount of assets under management.

The Securities Industry and Financial Markets Association, an organization which represents brokers, was not able to immediately provide comment.

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