Pay a modest annual fee and open up a whole new world of choices. By Elizabeth Leary, Contributing Editor April 30, 2010 Score one for investors.If you ever thought about investing in a terrific fund but didn't because it levies a fat sales charge, you will welcome a new Web-based service at Investforless.com. InvestForLess allows investors to buy load funds without paying a commission and, in some cases, to invest modest amounts in low-cost share classes that often require initial minimums of $100,000 or more. The site takes its inspiration from the Costco business model. In exchange for an annual membership fee of $250, InvestForLess lets customers purchase load-free "adviser" and "institutional" share classes of funds available on its platform. This is possible because InvestForLess, although it looks and smells like a broker, is structured as a registered investment adviser, with Scottrade as its custodian. So InvestForLess members have access to the same share classes that other advisers on the Scottrade network can purchase for their clients. Among the load funds available without commission are all 12 featured in Our Favorite Broker-Sold Funds. How you save. Granted, $250 may seem like a mighty sum if you ordinarily buy no-load funds without transaction fees through a discount broker. But the annual fee is dwarfed by the size of a typical sales charge. For example, investing $10,000 in the Class A shares of Amercian Funds' Growth Fund of America (symbol AGTHX) through the service would save you the initial $575 sales fee, more than offsetting the first year's membership. Plus, by getting Growth Fund of America's low-cost F-1 share class (GFAFX) through InvestForLess, you would also save $7 a year in annual fees. Should you decide you don't want to purchase any more funds through the site, you could transfer your fund shares to your ordinary brokerage account and avoid the $250-per-year fee. Advertisement The service's other plus is that it gives members access to share classes with prohibitively high minimums. Under InvestForLess's arrangement with Scottrade, the site can drop the initial minimum for many funds to $100 once its members' total assets in a given share class meet the minimum investment for that class (not all fund families permit this kind of aggregation, but InvestForLess will make use of the option for all funds that do). If the thought of entrusting your money to a new advisory firm gives you the willies, you can take comfort in InvestForLess's relationship with Scottrade. As custodian, Scottrade has actual possession of client assets and sends out members' monthly account statements (convicted swindler Bernard Madoff, by contrast, had no custodian and sent out investors' statements directly from his own office). InvestForLess is negotiating to bring Fidelity on board as a second custodian. If that happens, clients will get to choose which of the two brokers they want to hold their assets. Why hasn't anyone come up with such a business model before? "Any registered adviser could have done this in the past," says Kevin Knull, chief executive of InvestForLess, based in White Stone, Va. Maybe it's because loads, which typically run up to 5.75% for stock funds, are so lucrative for the brokers and advisers who pocket them. If InvestForLess catches on, it could deliver a serious blow to the commission-based compensation model.