Best Practices for MFDs to Market LAMF to Clients

December 5, 2025

According to The Economic Times, in FY 2022-23, 50% of mutual fund units (regular plans) in India were redeemed within one year, while 73% were sold within two years. Only 3% of units remained invested for over five years.

When clients face sudden expenses - be it a child’s wedding, an urgent medical need, or a short-term business crunch - their first instinct is often to redeem mutual fund investments. But there’s a smarter way: Loan Against Mutual Funds (LAMF).

LAMF gives clients the liquidity they need without disturbing their long-term goals. It’s flexible, quick, and keeps their compounding intact. As a mutual fund distributor (MFD), you’re in the best position to introduce this option - not as a salesperson, but as a trusted financial guide.

In this article, we’ll walk through practical, non-pushy strategies to talk about LAMF with your clients. From email templates to phone scripts, and how compoundexpress makes it all effortless - we’ve got you covered.

Why Clients Don’t Know About LAMF - And Why You Should Tell Them

As of January 2025, loans against mutual funds in India accounted for less than 1% of total mutual fund assets (₹50,000-₹55,000 crore out of ₹68 lakh crore AAUM) - that’s clearly an extremely limited uptake.

Despite its advantages, LAMF remains one of the least known tools in a retail investor’s financial kit. Many still assume redemption is the only path to liquidity.

Your role? To simply put the option on the table. Most clients don’t need convincing - they just need clarity.

Spot the Right Moment: When to Introduce LAMF

Timing is everything. Here are ideal cues to introduce the conversation:

The client is considering redemption for short-term cash flow
They mention big upcoming expenses (education, marriage, property booking)
You notice frequent SIP pauses or partial withdrawals
The client expresses discomfort breaking FDs or selling equity during market lows

Your simple rule of thumb: If they’re withdrawing, they should know LAMF exists.

A 3-Step Soft-Sell Framework That Works

Clients don’t like being sold to. But they do appreciate relevant, timely advice. Here’s a helpful framework for initiating the LAMF conversation:
Acknowledge Their Need
Start by validating their situation. Don’t rush to pitch.
“That sounds like a big milestone. It’s good you’re planning early.”

Educate Gently
Mention LAMF as an option, not a replacement.
“There’s something many investors aren’t aware of - you can actually borrow against your existing mutual funds instead of redeeming them. It keeps your portfolio intact.”

Offer Help, Not a Product
Make it clear you’re there to assist, not push.
“If you’d like, I can share a quick link. It’s a short, paperless process - and you’ll know instantly how much you’re eligible for.”

This approach positions you as a partner, not a loan seller.

Templates That Make Outreach Easy
Email Template (After a Call or Meeting)
Subject: Don’t redeem just yet - here’s another option

Hi [Client Name],

Hope you're doing well. Just a quick follow-up - if you're planning a large expense, there's a way to access funds without redeeming your investments.

It's called Loan Against Mutual Funds (LAMF). You get short-term liquidity while your mutual fund units continue compounding.

It’s quick, paperless, and doesn’t affect your credit score. Here's a link to check eligibility and apply: [Your LAMF Referral Link]

Let me know if you’d like help walking through it.

Warm regards,
[Your Name]

Phone Script (Initial Call)

“Hi [Client], just a quick note before you go ahead with that redemption - have you heard about borrowing against your mutual funds? It’s fast, digital, and keeps your investments untouched. I can send you a link right now.”

WhatsApp / SMS Prompt (Short and Effective)

Hi [Client], here’s a quick link to explore a loan against your mutual funds. It’s instant, digital, and doesn’t affect your investments. Let me know if I can help. [Link]

What compoundexpress Enables You to Do

With compoundexpress, LAMF isn’t just a feature - it’s a fully trackable, distributor-friendly workflow. Here’s what’s built in:

Generate client-specific referral links from your dashboard
Send links via SMS, email, or WhatsApp instantly
Track each lead’s progress - from click to application to disbursal
No paperwork for you to manage - the process is entirely digital

You can follow up at just the right moment, without juggling Excel sheets or chasing emails.

Objection Handling: Calm, Clear, and Client-First

If a client hesitates, respond with clarity - not pressure. Here’s how:
“Will this hurt my fund returns?”
Not at all - your investments stay exactly where they are. They continue to grow as usual.
“I don’t want a personal loan.”
This isn’t a personal loan - it’s secured against your existing portfolio. That means lower interest rates and faster approval.
“Is it safe?”
Absolutely. It’s processed through registered institutions and integrated into your investment ecosystem. You don’t lose control of anything.
“Sounds complicated.”
It’s just a two-minute process. If you'd like, I can walk you through it over a call.

Keep the Momentum Going

Once you share a LAMF link via compoundexpress, the platform lets you track the client’s journey at every key milestone:

You’ll know when a client initiates the application
You can monitor their loan status as it moves from review to approval and disbursal
You stay in the loop throughout, reinforcing your value as their financial advisor - even beyond the initial referral

This system ensures that you stay proactive, without being invasive.

Turn LAMF Into a Trusted Add-On - Not a Hard Sell

The most effective MFDs treat LAMF as a value-added service, not a revenue opportunity. It builds trust, keeps portfolios intact, and positions you as a modern, helpful partner.

The key? Right timing, empathetic messaging, and easy-to-execute workflows - all of which compoundexpress delivers.

Want to see how easy it is to refer a LAMF opportunity? Try compoundexpress in demo mode and explore it for yourself.