In the aftermath of Wall Street's avarice leading up to and during the financial crisis, investors made it clear that they expect to pay as little as possible for the investments they demand. While some financial providers have answered that call with more attractive pricing, others have only made a half-hearted attempt to compete on cost.

Oh boy! 4% off!
According to reports, BlackRock's (NYSE: BLK) iShares ETF unit recently cut its expenses on a number of its foreign exchange-traded funds. Because many of the funds have been popular and attracted substantial assets, fee breakpoints have kicked in, resulting in slightly lower charges from fund managers. The ETFs are therefore passing on those savings to shareholders in the form of a lower expense ratio.

As good as that sounds, though, the actual impact is pretty underwhelming. Morningstar says that with one exception, all of the fee reductions are less than five basis points (0.05 percentage points), with some funds seeing only a single basis-point reduction. Among the hottest ETFs, iShares MSCI Brazil ETF (NYSE: EWZ) saw its fees fall from 0.65% to 0.61%, iShares MSCI Emerging Markets ETF (NYSE: EEM) went from 0.72% to 0.69%, and iShares MSCI Japan ETF (NYSE: EWJ) dropped from 0.56% to 0.54%.

Much ado about nothing
Sure, it's great that iShares is charging its shareholders a little less. But it's still missing the boat against its competitors, which are charging considerably lower fees in some cases. Vanguard Emerging Markets Stock ETF (NYSE: VWO), which tracks the same index as the iShares emerging markets ETF, charges just 0.27% in expenses. And although Vanguard doesn't have a Japan-only ETF, its Vanguard Pacific Stock ETF, which has a little over 60% of its assets in Japan, charges just 0.16%.

Now granted, it only makes sense that iShares would want to cash in on its near-monopoly on single-country ETFs. Certainly other competitors, such as Van Eck's Market Vectors series, charge similar fees on their single-country funds.

But bragging about minor expense ratio drops just makes it clear that iShares doesn't really expect to have to compete on price. And that could prove to be a recipe for long-term disaster. Despite the fact that iShares and State Street (NYSE: STT) are still the top two ETF providers by assets under management, Vanguard led the way with the highest fund flows into its ETFs during 2010. And its price advantage on its emerging-market fund is responsible for a huge portion of its inflows; the ETF pulled in $19.3 billion last year, doubling in size and finally surpassing its iShares counterpart just this week.

The ongoing battle
Other ETF providers are starting to join Vanguard on the low-cost bandwagon. Charles Schwab (NYSE: SCHW) recently added to its line of low-expense ETFs, adding two funds focusing on U.S. mid-cap stocks and real estate investment trusts respectively. The new funds will clock in with annual expenses of just 0.13%.

Of course, annual expense ratios aren't the only costs of trading ETFs. One of the greatest strengths of iShares is that its funds are so widely followed that they tend to be much more liquid than some competing ETFs, narrowing the spreads between bid and ask prices and therefore making them more attractive to those who trade ETF shares actively.

But for most investors who don't expect to buy in and out of ETFs frequently, bid-ask spreads are a minor consideration compared to long-term costs. And with Schwab and Vanguard offering commission-free trades on their entire ETF lines -- something that iShares only does with a limited number of their funds via Fidelity and TD AMERITRADE -- being cost conscious is very much in vogue.

Make the right move
In the end, investors have to take care of themselves, and that means paying as little as you can for the investment vehicles you need. Fractions of a percentage point may not seem all that important when markets are jumping double-digit percentages every year, but over the long haul, they can make a substantial difference in how much money you end up with. Be vigilant and minimize investing costs, and you'll earn your reward down the line.

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Fool contributor Dan Caplinger has loved low-cost investing for more than 20 years. He owns shares of both Vanguard's and iShares' emerging market ETFs. BlackRock is a Motley Fool Inside Value pick. Charles Schwab is a Motley Fool Stock Advisor choice. The Fool owns shares of Vanguard Emerging Markets Stock ETF. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy never makes you pay a cent for the information you need.