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An Interview with Patrick Brown

An Interview with Patrick Brown

In September, IAS expanded its leadership team by appointing Bob Corbin to the role of executive chairman and hiring Patrick Brown as president and CEO. Citing Brown’s experience as an entrepreneur and executive, Corbin describes Brown as “the right person at the right time.” Agent Entrepreneur caught up with Brown less than a month into his tenure to learn more about his personal and professional background and what made IAS the right move for him.

AE: Patrick, it’s nice to meet you. Where are you from?

Brown: Nice to meet you as well. My mother is from Bolivia and my father is from Oklahoma. They met in college. My father got a Ph.D. in economics and joined the U.S. State Department, and that’s where I was born, in Washington, D.C. Then we moved overseas. We lived in Brazil, Bolivia and several other places in Latin America. Most recently, I lived in Charlotte, N.C., and Austin, Texas.

AE: Your father was a diplomat?

Brown: He worked in USAID, the development arm of the State Department. So his work involved going into different countries and helping with projects, generally in the agricultural world. In Bolivia, one of the biggest projects was developing the technology and infrastructure needed to grow banana plants and plantains.

AE: What is it like to grow up in more than one country?

Brown: I think it just broadens your horizons. Living in Bolivia, the second poorest country in the Western Hemisphere, opens your eyes to the realities of poverty and the fact that not everyone thinks the same. How do you bridge that gap? The answer is language, food and culture. I have a passion for traveling and connecting with people, and I think it’s because of that background. I had to learn how to get to know people and how to embrace other cultures.

AE: How’s your Spanish?

Brown: I still speak Spanish as fluently as I speak English. We go back to Latin America every couple of years with the family and the kids.

AE: How big is your family?

Brown: I met my wife in college and we have three kids: a daughter in high school, a son in eighth grade and another son in third grade. I do play golf and I ran a half-marathon this year, but most of my free time is centered around the kids’ activities. My son was just texting me earlier today about his football practice.

AE: Do you have any reservations about football, particularly in light of the concussion crisis?

Brown: I don’t. First of all, it’s about the coaching and the techniques. I help coach my third-grader’s team. You’ve got a tremendous amount of protection and technology going into the headgear. What folks don’t really realize is there are so many more concussions in other sports. I played soccer growing up, and I can tell you that, between all the headers and contact, I’ve seen more concussions playing soccer than I have watching football.

AE: How far did you take your soccer career?

Brown: In my high school years in Latin America, I thought I would be a professional soccer player. I went to Wingate University in North Carolina. I played there and realized there are a lot of good soccer players out there, even at the Division II level. I quickly figured out I needed to study, and I graduated with degrees in economics and finance.

AE: How did you choose your major?

Brown: I was always interested in the social sciences, including political science, but I took a macroeconomics class and it opened my eyes to the importance between people’s behavior and business and how they’re connected. I learned that, if you talk to 10 economists, you get 10 different opinions. That field is more nebulous than you might think. So I decided to couple that with a more technical degree, and that was finance.

AE: What was your first job out of college?

Brown: I was actually able to start my own company soon after graduating. I was fortunate enough to meet a gentleman in Charlotte named Wayne Cooper who believed in a business plan I presented to him. He is still a great mentor to me now. He put up the money, I put in the brains and 24/7 sweat equity and, together, we succeeded.

AE: What company was that?

Brown: Continental Transfer. It was a money transfer and bill pay company. Think of Western Union and MoneyGram.

AE: You graduated college and went into competition with Western Union?

Brown: You don’t need to put a man on the moon to be successful in business. Look at industries and products that have been around a long time but are not very efficient.

The remittance model has been around for hundreds of years in some form. Before starting the business, I experienced this personally, sending money back home. You have to fill out a form at a customer service desk and someone has to retype that into a DOS-based computer. It’s very inefficient. It can take 20 minutes to do a transaction. And some of the folks sending money are illiterate or don’t speak the language on the form.

Our business plan called for streamlining the registration process on the front end. We took it from 20 minutes to 10 seconds. We grew that company and ultimately sold it to a publicly traded company.

AE: Any growing pains?

Brown: All the usual growing pains a startup has. There were times I told my wife to make sure the groceries lasted an extra week.

AE: Do you ever reflect on those early days and think, “If I knew then what I know now …”?

Brown: I do. If I had the financial backing and the experience I have now, that kind of thing. But I did have Wayne, who was a seasoned businessperson and really a guiding light. And it was during that time that I went back to school and got my MBA at the University of North Carolina in Charlotte.

Growing up, my grandfather instilled in me that there are two things no one can take away from you: your education and your last name. Understand that, when there was a regime change in Bolivia, and you were on the wrong side, you could get thrown in jail. But they can’t take your name, and they can’t take your degrees. Therefore education and integrity are very important to me.

When we sold the company in 2004, I signed on to run the money transfer and bill pay division of Euronet, the company that acquired us. We wanted to be No. 1 and we couldn’t do that with organic growth, so we started acquiring a number of companies. The last acquisition made us the third biggest provider in the industry.

AE: Having been an entrepreneur since Day One, was it a big adjustment to join a company and adapt to their culture and their way of doing things?

Brown: There was some adjustment, but the reality is they were very good about allowing me to run the business. Euronet had three divisions and each division had almost a president or general manager for that business. So I was able to stay in Charlotte and execute my strategy. I reported to the chairman and CEO and they essentially allowed me to run it as a standalone.

That was a phenomenal opportunity, but I did get to the point where I wanted to get back to a smaller, entrepreneurial environment. I decided to leave Euronet and start Procesa, another company in the cross-border bill pay world. Instead of sending money to the family member, we wanted to create the opportunity to “directionalize” — to pay that family member’s electric bill, phone bill or tuition bill, for example. It was successful, and in 2008, we sold Procesa to NetSpend and I joined that company.

AE: When you were building Continental Transfer and Procesa, did you do so with the goal of being acquired, or did the companies that bought them come to you?

Brown: We were not looking to sell the first company. We had offers from General Electric and NationsBank, but we were still growing it. Euronet brought a growth strategy to the table. You need a sender network and a receiver network, and they came to me with the idea. If we had been acquired by GE or NationsBank, we would have been consumed and dismantled.

It was a similar situation with the second company. We were literally a year and a half or two years in and it wasn’t time to sell yet. But I saw the opportunity with NetSpend and decided to sell. When I joined, they were doing about $200 million in revenue with 200 employees, and they were owned by private equity. It was still very entrepreneurial, and it represented the opportunity to go into an industry that was relatively nascent.

So I joined up and eventually ran a division we called “commercial prepaid business.” My division worked with companies and individuals who wanted to rid their ecosystems of paper and cash by switching to online statements and electronic W-2s, for example. We took that company public in 2010. We then sold it to Total Systems Services, also known as TSYS, in 2012.

I could have stayed there for the next 30 years. It’s that kind of company. Folks who join don’t usually leave. It’s a well-run company with high integrity and a great reputation. But by the beginning of 2016, I was doing some soul-searching. We had been acquired three years earlier. If I was going to do something, what would I do? Lo and behold, through contacts and headhunters, the opportunity with IAS came up, and it happened to be in my backyard.

AE: You were in Austin?

Brown: When we were taking the company public, prior to selling to TSYS, I was spending a lot of time in Austin. My wife and I thought, instead of spending two weeks here and two weeks there and weekends at home, let’s go check out Austin. We decided to move the family in 2011. It’s a great city. Charlotte’s a phenomenal city as well. We went from one great city to another.

AE: So you didn’t have to move, but you did have to switch industries. How did your previous experience prepare you for work in F&I?

Brown: My history has been mainly in regulated industries. The money transfer and bill pay world is heavily regulated. We sold that company and started another one, which we sold to NetSpend, which is also very regulated at the state and federal level.

AE: Based on your prior experience, do you believe there is anything the automotive industry or the F&I segment needs to do better?

Brown: Specific to the regulatory environment, I think the industry has done a phenomenal job. We’ve got strong associations. But I know that, as the federal regulators get closer to the automotive industry, there will be more interest in our business line. We’re here to partner with our dealers and agents to make them successful. But the industry needs to be focused on who’s buying our products, and that’s the consumer.

The CFPB and the FTC want to be sure the consumer knows what they’re buying and whether there’s value in the product. Being able to get out ahead of that and telling the story rather than letting them tell the story for us will be important in the next five to 10 years.

AE: And that story will be told online.

Brown: Absolutely. Look, I think the power consumers have today is second to none at any point in history. You can go online and find information about any product you can think of. You can comparison shop for any product you can think of. The power is in the consumers’ hands, and it’s about how to design products and deliver them in the way they choose.

AE: Does that reduce or eliminate the role of the dealer and the agent?

Brown: Dealers and the agents who serve them will always have a role. But the opportunity to educate consumers on the value of service contracts and ancillary products online is powerful and should be embraced by the industry.

AE: What have your first few weeks on the job been like? How do you learn a new industry and meet expectations as an executive at the same time?

Brown: I make sure everyone understands I’m not the smartest guy in the room. It’s very humbling to step into an industry and know less about it than anyone else. That’s the first order of business, making sure you have the very best people in the industry onboard. You want people smarter than you and even more driven to succeed than you are, as well as people who are humble. Combine those three things and you’ve got a winner.

AE: You must have been pleased to learn you have a trainer like Frenchy Mélon on the team.

Brown: He’s phenomenal. And it starts with him, but it doesn’t stop with him. We’ve got people throughout the organization who are passionate about the products we sell, passionate about our agents. Somebody who wants to punch in at nine and punch out at four? This is not the place for them. Frenchy, Frank Klaus, Bob Corbin — a fabulous group of folks. And that’s part of what attracted me to IAS. This organization is full of passionate and talented people.

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Industry Trends for 2017

Industry Trends for 2017

With a tumultuous 2016 in the books and a new year underway, it’s time for our annual look ahead at what industry experts believe 2017 has in store for your agency and the dealers you serve. Despite the lingering tensions generated by a divisive presidential campaign and widespread concern of a downturn in new-vehicle sales, the 19 industry executives and experts we spoke with put forth a generally positive outlook for the nation, the economy and the automotive industry.

The Economy

Alan Miller, senior vice president of sales for CNA National, noted that, while the economy has grown slowly over the past few years, it has grown nonetheless, and he believes that trend will continue. He expects new-vehicle sales to match or slightly exceed 2016 levels and for year-over-year sales numbers to remain steady.

“The industry should enjoy slight gains in sales from 2016, buoyed by interest rates that will remain invitingly low, in addition to probable tax cuts that will allow consumers to have more discretionary spending,” agreed Bob Pruitt, president of Cal-Tex Protective Coatings Inc.

That said, our experts, across the board, all agreed that 2017 is difficult to predict at this point, since no one is entirely sure what President-elect Donald Trump will do once he takes office in late January.

“It’s going to be interesting to see what impact the new administration will have on the economy in 2017,” said Kelly Price, president of National Automotive Experts (NAE)/NWAN. “I believe we will see new-vehicle sales volume continue to slow down as the industry reaches a plateau. In the fourth quarter of 2016, we saw several manufacturers reforecast their late-2016 sales projections and slow manufacturing to reduce dealer inventory as a result of a decrease in consumer demand.”

“We just came off a contentious election, and we were all led to believe the election of Donald Trump would send the stock markets spiraling downward,” noted Dave Duncan, president of Safe-Guard Products International. “In fact, markets are up significantly since Election Day and looking like they may go even higher. Financial service stocks have been among the big winners, so those in the F&I space could benefit quite nicely from the election results. At least, that is what the markets are telling us.”

Jeremy Lindsey, COO of Alpha Warranty Services, agreed, noting that, if the gross domestic product remains steady, unemployment rates continue to fall and gas prices stay low, 2017 could be a solid year for agents and dealers.

“It feels like there are more variables this year than years past, in part because of the political climate,” Lindsey said. “As long as the economic outlook for 2017 remains positive, and President-elect Trump follows through with some of his policy objectives, I believe the economy as a whole and the auto industry will benefit.”

One executive who is incredibly bullish on the industry’s stock in a Trump administration is Larry Dorfman, chairman and CEO of Automobile Protection Corp., home of the EasyCare brand.

“I believe the initial impact of a fully Republican government will be a positive one and that the economy, overall, will do fine in 2017. Frankly, probably better than had Clinton won,” Dorfman said.

While the short-term gains for 2017 will be high, Dorfman added, they could come at the expense of long-term prosperity. That will depend in large part on the severity and reach of promised tax cuts. Depending on their impact on the national deficit, there could be long-lasting effects that won’t be felt for several years. It all hinges, Dorfman noted, on whether the money actually does “trickle down” like the incoming administration is claiming, or whether it “sticks to the top” like it has in the past.

Randy Crisorio, president and CEO of United Development Systems Inc. (UDS), agreed with Dorfman’s positive outlook, noting, “In my view, the economy next year will project growth amid renewed optimism for jobs and the psyche of millions of Americans. There have been so many positives laid out by the incoming administration that it’s difficult to recall them all.

“Tax relief, both individual and corporate, will deliver more spendable income for families to buy goods and services and will drive business expansion through job growth. Repatriation of corporate monies from other countries has the ability to infuse trillions of dollars into the American economy. When Americans have cash and confidence in our future, the lure of shiny new models of cars and light trucks will prevail.”

On the flip side of the coin, Robert Steenbergh, founder and CEO of U.S. Equity Advantage/AutoPayPlus, is a bit more hesitant about what impact the Trump Era will have on the economy in general, and the automotive market specifically. “I think the automotive industry will have a much more hesitant outlook based on fear of the change that Trump might bring,” he said.

Steenbergh pointed out that, in past elections, donations to Republican candidates outpaced those to Democratic candidates across the entire automotive market by a fairly wide margin. Yet, he noted, “Donald Trump reportedly collected the smallest amount of auto industry contributions of any GOP presidential candidate in two decades.” That leads him to believe there are a lot of people who are leery of what 2017 will have in store for the industry, with a “wait-and-see” attitude prevailing.

Thomas Elliott, president of StoneEagle, agreed — with a caveat. He noted that he believes we will enjoy a short-term boost to the economy in 2017, with the automotive market, in particular, benefiting. However, he noted, “Economic forecasts that I have read seem to lean strongly toward a slight decrease of around 2% for new cars, with a total target of around 17.1 million units.”

Speaking before the Federal Reserve Board announced a 0.25% short-term interest-rate hike on Dec. 14, Tony Wanderon, CEO of National Auto Care, said an increase was overdue. But he believes the fate of the auto retail market in 2017 would depend on several additional factors.

“With the new administration, I can see some pretty substantial tariffs being put in place on imports but to what extent, only time will tell,” Wanderon said, noting that the Fed is not the only influencer. “Lending has been crazy with advances reaching over 150% of MSRP and terms rising to up to 96 months, thus all of those customers are out of the market for years. In addition, all the pent-up demand is gone, so now we will be in our normal cyclical downturn.”

Industry

Presidential elections notwithstanding, there are a few trends our experts are paying close attention to as we move into 2017. Each has the potential to impact the automotive market as a whole — and the F&I segment in particular — in a variety of ways.

Brent Griggs, president and CEO of Portfolio, noted that one trend he is anticipating in the coming year is a cooling of the historically high leasing levels the market has been experiencing. This, in turn, will benefit the F&I market, opening up more opportunities for sales than many dealerships are achieving in today’s lease-heavy atmosphere.

On the flip side, however, Griggs also expects fleet sales to remain strong, which has the effect of reducing F&I opportunities. Finally, he noted, “We expect continued high profitability for auto dealers in general and a continuation of the consolidation that has begun, though at a lower pace due to high valuation expectations of sellers.”

Another executive who is carefully monitoring the leasing situation is Michael Feely, executive vice president of sales for ECP Inc. He noted, “The biggest trend we will be watching in 2017 is the effect of 3.5 million off-lease vehicles flooding the automotive market. This will significantly increase pre-driven inventories, thus creating a greater price-competitive market. This increase in pre-driven inventories may result in decreased profitability.”

“We will be watching regulatory activity, interest rates, availability of credit, and lease penetrations. All of these factors will play a part in the strength and profitability of F&I,” agreed John Luckett, senior vice president of sales and marketing for Resource Automotive/The Warranty Group.

John Pappanastos, president and CEO of EFG Companies, listed four trends that he believes will have a major impact on the market in the coming year: a tightening of consumer credit, manufacturer bonuses, regulatory reform and dealership consolidation.

Regarding consumer credit, “according to J.D. Power, the percentage of car loans with negative equity rolled in has reached a 10-year high, exceeding 31%, and the average amount of negative equity is over $4,800 per loan,” Pappanastos said. He believes this tightening of credit will be a positive thing for the industry in the long-term, especially in F&I. He noted that skyrocketing loss ratios are the stuff of nightmares for administrators.

Using GAP as an example, Pappanastos added, “The increasing severity of GAP claims is attributable to the fact that the higher levels of negative equity is being absorbed in consumer auto debt by extending loan terms. We’ve noticed that GAP claim frequency curves are matching the curves that we saw in 2008–’09, before the Great Recession. I’m not suggesting at all that we’ll see another recession. The credit crisis that led us into the Great Recession was related to mortgages, not auto lending. I’m just saying that GAP loss ratios is a trend that we are watching very closely.”

Matt Croak, president of Wise F&I, agreed that GAP is a good indicator of the market as a whole.

“GAP loss experience is being impacted by a changing external environment including lower gas prices leading to more miles driven, an increase in collision frequency, rapid advancements in technology driving up repair costs, and loosening of credit guidelines,” Croak said. “Unfortunately, these external conditions, among others, are contributing negatively to the loss performance of GAP.” To offset those losses, he noted, companies are being forced to build additional financial reserves, which then impacts every other product down the line.

The second trend Pappanastos is carefully monitoring is manufacturer bonuses. They have gotten so rich, he says, that in some cases, dealers are starting to forgo front-end margins in pursuit of the bonus check. Dealers across the board need to be careful, however, since he noted that it will be difficult to instill operating discipline once those incentives dry up.

Pappanastos said he expects that, for the incoming administration, regulatory reform is absolutely top-of-mind, and he expects some shakeups around the auto finance space. As for dealership consolidation, he expects the trend to continue, if not accelerate, in 2017.

“We expect to begin seeing an acceleration in public company consolidation. And we expect them to be targeting eight- to 12-store groups,” Pappanastos said.

Consolidation is among the big trends that Jim Smith, CEO of SouthwestRe, will be monitoring in 2017 as well.

“Factors I believe influencing this are economies of scale, the availability of money and the potential for capital gains tax decreases,” Smith said. “These factors will not only influence the consolidation of the automotive industry, but also F&I providers.”

Another trend executives such as Garret Lacour, CEO of RoadVantage, are paying close attention to is the price of oil. He believes any pain at the gas pump could have a significant impact on not only what models car buyers pursue but whether they choose to purchase at all.

“If fuel prices continue to stay in check, we will continue to see growth in the truck and SUV side of the business. However, OPEC’s December agreement cutting oil production could impact that,” Lacour said.

Lacour also believes F&I will play a larger role in profitability in 2017. “The public companies will continue to report an increase in F&I income, which will raise the bar further for finance departments to generate a larger percentage of front-end profit for dealers. This income will not come from finance reserve margins or even higher VSC penetration, but from vehicle protection products that offer the consumer a clear value proposition.”

Technology, as always, also has a part to play in the year ahead. Some executives, like Jimmy Atkinson, COO of AUL Corp., believes the proliferation of new technology aimed at the sales and F&I departments could be coming to a head.

“It seems we may be reaching a point where technology innovates the F&I office in a disruptive way,” Atkinson said. “We have seen automation of our processes like the menu, but there seems to be a drive to full transparency and web-driven process that includes F&I.”

That, in turn, could force F&I managers to start developing a different skillset and drastically alter the process they use today. Ultimately, however, Atkinson sees this as a good thing. He believes consumers will be more interested in purchasing more F&I products once they feel the process is more transparent and the value of those products is made more clear.

And the push toward technology extends beyond the F&I office, according to Patrick Brown, president and CEO of IAS. He noted that the increasingly complex technologies in the cars themselves will lead to more F&I offerings either coming to market to address those specific needs, or current products evolving to better cover those systems.

“VSC programs that integrate the addition of in-vehicle technology, powertrain, and safety systems will become staples in F&I,” Brown said.

F&I Products

Trying to predict which F&I products will get hot and stay hot — and which will cool off — has become an annual tradition for agents and providers. Our executives have a few in mind that they believe will be crucial to success in 2017.

At the heart of F&I is the desire to protect consumers from unexpected problems, as well as build their loyalty and give them a reason to come back to the dealership, Pappanastos explained.

“Another overarching objective of dealers is to build relationships with customers over the life of their vehicle ownership,” he said. “So I think you’ll see more emphasis on F&I products that drive customers back to the store’s service drive. These would include loyalty programs and discounted prepaid maintenance programs.”

Pappanastos went on to point out that F&I product sales generate around 40% of the average dealership’s gross margin, so the value of these products and their ability to bring people back in the door can’t be overstated. Luckett said vehicle service contracts will continue to be the “bell cow” for agents and F&I producers, and Atkinson agreed.

“I see the staples getting stronger with VSC in the lead,” Atkinson said. “We’ve seen high penetration rates, and dealers recognize it touches all the key profit centers in the dealership — service, parts and rental, as well as profits in F&I for sales and customer retention. Bringing that retail customer back to the selling dealership is paramount, and VSCs do that.”

Crisorio agreed, adding, “Mechanical service contracts will remain the core F&I product next year. We will continue to see modified plans being developed that are more targeted to high-tech electronics and more retail merchandising plans will be offered such as limited warranty powertrain coverage.”

On the heels of VSCs — and perhaps exceeding them in importance, depending on whom you ask — is GAP coverage.

Noting that “All the products are important, depending on the situation,” Duncan said, “On retail deals, GAP and VSC are a must for all kinds of good reasons. When a navigation head unit can cost $4,000, leaving the store without a VSC makes little sense. As for GAP, why would anyone take the chance of having a $5,000 or $10,000 claim when an extra $10 per month eliminates that risk?”

“GAP should continue to be a high-penetration product,” said Wanderon. “With terms, interest rates and negative equity going up and payments and resale values going down, there is not a better product in the market today.” He went on to offer a caveat, however, noting, “The only thing that every dealer should know is that the pricing will be going up. Over my 25 years in the GAP business, I have never seen claims this high.”

Another category that could see continued penetration in the coming year are bundles that make it easy for consumers to opt for a package deal offering a wide range of protections.

“We see the 2016 trend continuing into 2017 for robust, bundled products that include tire-and-wheel, dent-and-ding, windshield repair, interior/exterior coverage and key replacement,” said Lacour. The reasons for the popularity of the bundle, he explained, are that it is a much easier sell for F&I managers. And for consumers, they have a much higher value proposition, covering a much broader range of parts and functions their factory warranty isn’t likely to address.

Smith agreed with the dominance of the bundle, noting, “Bundled products gained in popularity at the F&I desk in 2016, and I think that will continue in 2017. I also believe that the utilization of loyalty programs (and products) designed to differentiate dealers from each other will continue to increase.”

Finally, products that provide protection against the elements will remain a top seller, said Pruitt. “The average age of vehicle ownership remains above 10 years. Products and services that help maintain the vehicle and its appearance — environmental protection products, paintless dent repair, prepaid maintenance programs and tire-and-wheel programs will increasingly continue to be popular aftermarket additions.”

Rules & Regulations

What will Donald Trump, who promised sweeping regulatory reforms throughout the campaign, do once he takes office? We asked our executives to hone in on this topic and give us their take on what changes to the regulatory landscape they see coming in the next 12 months.

“Among other things, President-elect Trump has been straightforward about his desire to reduce regulations to help spur growth,” Brown said. “In fact, he campaigned on the promise to remove two regulations for each new one that is passed. This should help businesses in multiple industries including the automotive and finance industries, and the economy as a whole.”

“Regulations that currently affect the industry — from the Consumer Financial Protection Bureau to Obamacare to overtime pay rules — are likely to lessen their grip and financial drain on the dealers and providers in the industry,” said Pruitt. He went on to point out that the stock markets, across the board, have seen gains since Donald Trump’s election, but, he added, “It will be interesting to see that when his economic policies are ultimately announced and begin to be implemented whether Wall Street is as bullish as it has already shown to be.”

However, cautioned Steenbergh, don’t expect massive changes overnight. “I do not believe that President-elect Trump can simply repeal the Dodd-Frank Act and abolish the CFPB in one fell swoop. Nor do I believe it’s necessary. The recent Wells Fargo scandal illustrates that some level of consumer protection is needed.”

For Lacour, it comes down to, again, taking a wait-and-see approach. “We can only speculate at this point, but if Trump’s team follows through on their pledge to eliminate or at least curtail Dodd-Frank, we expect to see some major changes with the CFPB. At the very least, the new administration will change the CFPB’s executive structure, thereby limiting its power and reach in regard to automotive finance regulations.”

That being said, Lacour added, he doesn’t believe all regulations will disappear — and he agreed that some are needed to protect the public from unscrupulous lenders — but on the whole, he noted, there is good reason for dealers to be upbeat about where things are headed on the regulatory front.

Among others, Lindsey, in particular, stressed that the industry needs to stay vigilant, since no one really knows what Donald Trump will actually do once he takes office, and it seems likely that he will ignore or recant on some — or even all — of the promises he made.

“With every unexpected cabinet appointment, this question seems very difficult to answer, because unexpected appointments may translate into unexpected policies,” Lindsey said. “As much as I’d like to see changes to the Dodd-Frank Act, I believe a repeal is unlikely because it would require new federal laws that would be difficult to pass. [The North American Free Trade Agreement] will be an interesting topic, as Mr. Trump made his disdain for that trade agreement quite apparent on the campaign trail. If the president-elect creates significant reform on trade deals, that could affect the automakers’ ability to make profitable vehicles abroad.”

Duncan made clear that, at the end of the day, it shouldn’t make much difference what regulations are — or aren’t — passed or repealed.

“The future of the CFPB remains to be seen. In truth, it should not make any difference,” he said. “We all know right from wrong anyway. We don’t need 4,500 lawyers in Washington to explain this to us. Be transparent, offer comprehensive products with a clear consumer value, and allow the customer to make their own choices. It really is as simple as that.”

Part of the issue with the CFPB is that in November, as Smith noted, there was a court ruling that will likely have more impact than Donald Trump will, at least in the short term.

“The CFPB just lost a landmark court case (PHH v. CFPB) that will significantly impact their previously increasing involvement in all lending areas,” Smith said. “Let’s hope this bodes well for the F&I industry, but as I said last year, the people in this industry still need to be diligent in their manner of operations.”

Pappanastos agreed, noting that it is more likely that the issues surrounding the CFPB will be felt in 2018 and beyond, rather than in the next 12 months. He doesn’t believe it is as high a priority as some in the industry might hope, but there are other factors at play as well. “The CFPB is appealing the ruling, which could elongate the final decision into 2018. The bigger, more likely possibility for 2017 is the ratification of the Reforming CFPB Indirect Auto Financing Guidance Act. This act passed in the House with a bipartisan vote of 332-92. Considering the widespread approval of this act, it is highly likely to be ratified in the coming year, especially with a Republican-held Senate.”

“Ultimately, only time will tell as it relates to the regulatory and compliance landscape,” Croak said. “At the federal level, a Republican administration working with a Republican majority in both houses of Congress could achieve some success as it relates to mitigating the effects of Dodd-Frank and the CFPB on our industry.” In particular, he pointed to Senate Bill 2663 (and the related House version, H.R. 1737), as well as H.R. 1486, another bill in the House of Representatives, which now have a significantly better chance of being passed. Both could have a positive impact on the automotive industry.

“We continue to be bullish on the U.S. economy, especially with a Republican majority in Congress to support Mr. Trump’s efforts to shore up America’s infrastructure,” Griggs concluded.

A Closer Look at Technology

A slew of new websites, mobile apps and platforms designed to inject Silicon Valley into the sale and finance of new and used vehicles is a sure sign that technology will play a major role in how dealers move units — and F&I products — in 2017. Our executives took a moment to dive deeper into how they see technology impacting the industry in the coming months.

It is important to note that not all the executives saw technology as taking any huge steps forward in 2017. Griggs, for instance, sees the march forward as continuing, but at the same pace it has been for the last few years. He noted that he has seen “Nothing dramatic, just the continued move to electronic processing that is now becoming the industry standard and adoption of tablets to support and sometimes replace the numerous F&I menus that exist.”

“I don’t anticipate any drastic changes overnight as many developments and changes are proofs of concept that take time to validate. I believe that we will see more dealerships testing the idea of reshaping the F&I process,” Lindsey said, noting that, in general, predictions around technology, for good or ill, tend to be the least consistent, and the least reliable.

Many of the executives, however, do see major changes on the horizon.

“Technology will continue to evolve, and I think we will see more providers offering online platforms for vehicle sales from start to finish, including F&I,” predicted Miller. He believes the usage of tablets will grow as dealers attempt to make the purchasing process more consumer-friendly, and he expects the push toward making more F&I product information available online to accelerate in 2017.

Price agreed, noting that research proves consumers across the board are unhappy with the retail automotive buying experience today, and the industry needs to do a better job of finding ways to make that process easier and more enjoyable.

“We have already seen the buying trends of the millennial generation impact retail consumer transactions,” Price said. “I believe we will see their behaviors and buying trends begin to impact transactions in the finance office. Millennials have an unbelievable amount of information at their fingertips. The industry will need to adapt to effectively engage these buyers. Integrating finance products into consumers’ mobile technology will be critical.”

Croak sees it as being a combination of the two views, with technology continuing to evolve — whether the industry likes it or not — but he doesn’t anticipate a seismic shift.

“Enhanced technology integration is leading to greater adoption of electronic contracting, rating, remittance and cancelations of contracts. Deeper integration between providers and lenders may lead to more efficient cancelation processing and quicker refunds for the consumer,” Croak said. “These processes will continue to refine, becoming more seamless to the dealer and the consumer.”

Elliot was also quick to point out that the push for better technologies — and better integration of the technology we have — isn’t coming from car buyers alone. “We are seeing a major push from OEMs, major automotive groups, product providers and new sales channels in trying to determine how to best connect with the internet consumer,” he said.

Elliot went on to predict, “I fully expect to see a massive shift in the use of analytics along with educational and informational tools by all of these parties in an effort to connect with the direct consumer. Information and the education and awareness of the protection products is critical in the evolution of the processes and technology.”

Putting It in Perspective

Ultimately, what the executives agreed on was that the automotive market is changing on all fronts, new technologies, new (or repealed) regulations, and changing product lines all contribute to a vibrant and dynamic market that never stops or stands still.

And those changes should inspire more enthusiasm than fear among agents, said Pappanastos. “This may sound a bit cliché, but I believe the changes transforming the auto industry create as many opportunities as they do risks, and we’re excited about the future.”

“Dealers and consumers will continue to push for value in the products and services they are offered,” said Miller. “Dealers want to deliver an enhanced buying experience along with a superior product experience. Because of this, any company associated with the dealer market will need to operate in an environment of continuous improvement in their products, services and representation to keep pace.”

For Smith, while the surprising election of Donald Trump increases the odds of major change — both good and bad — it just means businesses in all segments of the automotive market will need to stay nimble. “From a strict business standpoint, there will probably be opportunities, but we all need to be as flexible as possible in adapting to, taking advantage of, and even surviving these changes.”

“The more things change, the more they stay the same,” said Atkinson. He pointed out that good companies with good business plans and excellent customer service will continue to thrive, no matter what changes the country, the economy, or the automotive industry might face.

To that end, said Dorfman, even agents and product providers need to look beyond the F&I space. “The entire market is changing, and it is evident that focusing only on F&I will limit the ability of any agent or company to deliver an overall positive impact and experience to a dealer,” he said. As F&I becomes an earlier part of the car buying process, and as more information moves online, he added, intensive training will need to happen to ensure the entire dealership is on the same page.

“Focusing solely on the F&I office will be a thing of the past. Helping dealers hold front-end gross in a margin-crushed environment, improving the customer experience, and retaining customers through to the next purchase will be keys to the success of agents and administrators going forward,” Dorfman said.

“What’s the old saying? ‘There’s price, quality and service — pick any two you like, but you can’t have all three,’” said Steenbergh. “Bigger always leads when it comes to price because of buying power. But I believe the majority of customers will always be willing to pay for quality and service, especially if they like and trust the dealer they’re buying from.” He agreed that everyone — from F&I to service — in a dealership will need to learn to engage with consumers through the entire lifecycle of the vehicle, not just at the initial point of sale.

One thing is certain: The next 12 months won’t be “business as usual,” but will likely have a variety of twists and turns that no one — not even our expert panel — can predict. It is an exciting time to be in the automotive space, with many challenges to be overcome, but many more opportunities to be found.

As Price put it, “Buckle up, because 2017 is almost here, and it’s going to be a fun ride!”

Posted in Industry1 Comment

An Interview with Jeff Jacobs

An Interview with Jeff Jacobs

Jeff Jacobs is the CEO of Chicago-based Universal Lenders, home of the Zero Plan for F&I product financing. On the eve of the 2016 P&A Leadership Summit, AE caught up with Jacobs to learn what it’s like to grow up in the business, where agents and dealers can find new revenue, and why competition is always a good thing.

AE: Jeff, I know you’re based in Chicago. Are you from there as well?

Jacobs: Born and bred here in Chicago, in an Italian, blue-collar neighborhood. I grew up in a car family. I was a car dealer for 40 years or so, alongside my dad and uncle and brothers. My dad started out as a Studebaker dealer, and by the time we sold out in 2006, we had Buick, Pontiac, Honda, Mazda, Hyundai and Ford. We were a high-volume group.

AE: Were you an early import adopter?

Jacobs: We added Honda in 1987. It was popular but nowhere near the juggernaut it became. We bought it from a motorcycle dealer. People said we were nuts. But the American factories allowed the imports to come in by not building great product. Anyone who thinks world competition is not a good thing should have been in our service department in the ’70s. We had long lines of GM cars every Monday morning, all overheating. Today, there’s not much difference in the cars. The American manufacturers stepped up.

AE: F&I has come a long way since then as well.

Jacobs: My experience as a dealer taught me about financial products, service contracts and tire and wheel, and now I finance those products for dealers through agents. Considering what I put those agents through as a dealer, I have a real appreciation for all my agents.

AE: Any advice for the agents reading this article?

Jacobs: Don’t give up. You might have to go to the store 20 times. Keep leaving your card. You might get there on a day the dealer is frustrated with their current provider. That’s what happened in my store. I had an agent who wouldn’t stop bugging me, and he happened to come in on a day when a claim wasn’t bought and I felt underappreciated. And he got in and never left.

The other advice I would offer is that there are a lot of ways to increase revenue and incremental sales in the F&I department. You can’t let cash customers go by the wayside. Traditionally, dealers only used payment plans for credit-challenged customers who couldn’t get F&I products on a retail installment plan. And when times were good, they didn’t use payment plans at all.

AE: Did you use them when you were a dealer?

Jacobs: We liked the concept but not the program. We didn’t like waiting 90 days for money and we didn’t like that it could only be used for service contracts. So when we sold our dealerships and I needed something to do, I decided to get into this niche financing business. But I approached it like a dealer. I thought of every objection.

AE: Like not wanting to wait three months for the money.

Jacobs: Right. Instead of waiting 90 to 100 days to get funded, we pay our dealers within seven business days. Instead of offering financing for service contracts only, we’ve made other products eligible, including maintenance programs. Most importantly, our collection efforts reduce chargebacks by half. And the ZERO Plan is not just for credit-challenged buyers but cash buyers, which can be 30% to 50% of your customers.

AE: All the compliance experts say you should treat every customer the same exact way, and that includes offering everyone the same protection.

Jacobs: How can you say how important these products are for finance customers and then not even bring it up to your cash customers? Dealers look at average revenue per retail deal. The true gauge should include separate averages for finance and cash customers. You need to maximize revenue for each subset. And, yes, I would venture to say any governing body that is looking for a lawsuit and sees you’re only beating up on subprime buyers has a pretty good case. And it’s just not payment packing. You need to offer everything to everybody or somebody’s going to sue you.

AE: Why are we seeing all these payment packing headlines 10 years after that practice was supposed to have stopped?

Jacobs: I think it’s greed. Payment packing is easy to do. It’s not easy to sell the benefits. One way is illegal and the other isn’t. If the owner cares about compliance, their employees won’t take advantage of people.

AE: Michael Tuno, the agent and compliance expert, would say that if the dealer’s license were at risk, that would make a big difference.

Jacobs: He’s right about that. But if you have ever read a franchise agreement, you know it allows the manufacturer to take away your franchise. But they won’t do it. When it’s a successful dealer who sells a lot of cars, the manufacturer doesn’t want to get involved. When I was a dealer, I never saw any dealer lose their license or a franchise or even came close.

AE: Did you have any bad actors in the F&I department?

Jacobs: We did, and we tried to clean it up. Bear in mind, there was a time before Regulation Z when we had customers sign blank installment agreements and then mailed them their copy at the maximum allowable rate. But we became less and less tolerant of practices that alienated our customers. The F&I manager is the last person the customer sees. If they leave with a bad taste in their mouth, they don’t come back.

AE: What do you think about putting information and pricing for F&I products online?

Jacobs: Well, like I said, if auto retailers don’t make a push to sell products to everybody, the direct marketers will. Whether it’s a service contract or tires, somebody will. I believe in making it easy for customers to buy these things. The other place I would like to see more emphasis is in the service drive. We’re not going to be able to make any more money on finance customers. You have to look to cash buyers and service customers. That’s how you drive revenue going forward.

The way cars are being built today, with fewer and fewer breakdowns, I’m wondering how the industry is going to keep service contract sales levels up and keep from dropping the price? I don’t know how they do that. It’s a good industry right now, but outside competition is going to drag it down.

AE: Tesla will tell you they can fix your car remotely, if it’s a software issue.

Jacobs: It’s all about competition. When Chrysler, Ford and Chevy owned the market, they sold everything they could build. As much as I’m conservative in my thinking about business and politics, I don’t believe big banks, for example, should gobble up the small ones. I believe there has to be competition. I hope that never happens to our industry. No one company should buy everyone up.

AE: What do you do for fun?

Jacobs: I like to fish. I like to golf. I like to spend time with my grandkids. I have two kids and two grandkids. My son lives in Brooklyn and my daughter is here in Chicago. We go back and forth a lot. I used to play hockey and I get to a Blackhawks game two or three times a year.

AE: It’s a good time to be a Blackhawks fan. When will the Cubs win a pennant?

Jacobs: Well, I have always been a Cubs fan, and I would say that, within the next three years, they’ve got the best chance in my lifetime. I would love to see it.

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An Interview with Gil Van Over III

An Interview with Gil Van Over III

On Tuesday, Aug. 30, at Paris Las Vegas, 83 industry professionals sat for the Certified Automotive Compliance Professional exam, offered for no charge to Compliance Summit attendees by Automotive Compliance Education (ACE). The following week, Agent Entrepreneur met with Gil Van Over III, the organization’s executive director, to learn more about the program and Van Over’s career in auto finance, training and consulting.

AE: Gil, where are you from?

Van Over: I’m proud to say I’m an Air Force brat. I’ve lived everywhere from the Orient to Europe to the United States. I went to high school in Hawaii and Dayton, Ohio, if you can believe that.

AE: What was your favorite stop?

Van Over: My favorite was Hawaii, but I finished high school in Dayton and then went to Ohio State for a couple years. Then I decided to join the business world. I went to work for a finance company and then went to one of the captives. From there, I was hired as the COO of Premier Auto Finance, which was a Pat Ryan or Aon company. Finally, I started gvo3 & Associates in 2001.

AE: What spurred the move from finance to compliance?

Van Over: At Premier, we were struggling with the manufacturers offering zero percent financing. It was hard to compete anymore. So we decided to shut it down and I decided to go into business for myself, offering compliance solutions, including training.

AE: Compliance was not the hot-button issue in 2001 that it is today.

Van Over: I kind of grew with the times. The timing was fortunate.

AE: How do you keep up with changes to rules and regulations at the state and federal levels?

Van Over: I read a lot of industry publications and I keep track of pending legislation and court decisions that require a dealer to have a plan in place. From that, I apply the methodologies I learned at the captive to incorporate those types of things as processes. We’re a process-improvement company. We use audits as a core competency to deliver consulting. That’s driven by processes, processes, processes. If they’re doing it right, they’re doing it right consistently. If they’re doing it wrong, they’re doing it wrong consistently.

AE: Are dealers and F&I professionals more receptive to change now than they were when you started?

Van Over: There has been a huge growth in awareness around the industry over the past 15 years. In the beginning, I had to spell “compliance.” Now, most people have a better understanding of what it is. The problem is that it’s so voluminous, they don’t know how to manage it.

AE: So you leave it to the experts.

Van Over: Exactly. I can tell you, for example, that the CFPB is focused on this aspect of your business and this is how you can demonstrate you are in compliance. It’s transitioning what you have to do into how to do it. That’s been the biggest key to our success.

AE: Do you still encounter F&I managers who play ball while you’re in their dealership and then go back to what they were doing when you leave?

Van Over: You run the gamut. You’ve got the people who think they’re too small or too isolated or insulated to have to worry about it. You run into the people that are saying, “Well, I’ve been at 17 dealerships in the last seven years, so whatever I’m doing, I won’t be here when the bad news comes.” And you do have the people that are just waiting for you to leave. They know you’re not coming back for six months or a year and they can go back to doing what they’ve always done.

But for the most part, the people working in the industry today understand that it’s the right thing to do for the customer, and it’s simply good business. You can keep the products you’ve sold because they’re not going to be canceled. You will have a higher degree of return customers. I think most people want to do the right thing. They need help understanding what the right thing is.

AE: Will your job get easier as the industry gets younger?

Van Over: That’s a good question. I’ll say there are a lot of urban myths out there and there always have been. Only now, what once was communicated by fax or phone is now on social media, and everyone’s opinion can be heard. You can’t just take a 144-character tweet as gospel, but many younger people do.

AE: We keep hearing about banks and finance companies knocking on dealers’ doors to perform surprise audits, but I have yet to speak to a dealer who has been through one. Is that actually happening?

Van Over: It’s not necessarily your finance company coming into your dealership and doing an audit but statistically reviewing portfolios. Most finance companies will have basically the same escalation process followed by HR professionals: First, you identify the issue and come to an agreement. If the offender doesn’t stick to the agreement, you follow with a written notice. If it still doesn’t correct itself, after determining the level of risk is too high, your finance source will say they can no longer do business with you. It’s not an overnight thing.

AE: Speaking of overnight, we’re fresh off Compliance Summit, where you and Jim Ganther and Michael Tuno presented the review session and proctored the exam for ACE certification. Ganther hinted that you pulled a few all-nighters to get the materials done in time for the show.

Van Over: He’s right about that, but I wouldn’t want anyone to think we threw that curriculum together in a few days. This idea first germinated in my mind about five years ago. I told Jim that there’s an opportunity for us to provide a certification for the industry that would leverage a lot of factors and, more importantly, provide some best-in-class certification that would rival what other professions get.

Think about doctors, nurses and teachers. They all have a requirement to not only get their degree and license but participate in continuing education to make sure they stay current. We didn’t see any offerings in the industry that met that standard.

So we had everything in place, but we still had to finalize some of the details, and that part happened fast. But we had the opportunity to introduce it to a great audience at a great venue.

AE: To use your own word, compliance is a “voluminous” topic. How did you lasso all aspects of dealer compliance into four hours of review and a 200-question exam?

Van Over: First, we understand what we’re good at. We’re good at compliance with all of the rules, regulations and statutes for best practices that revolve around sales and F&I. Dealerships also have parts and service departments, but we don’t pretend to be good at OSHA. What we’re good at is the departments that square off with the customer.

I do a lot of litigation support, so I see the arguments for unfair and deceptive practices. We have developed best practices. We generate the documentation that shows you were not deceptive in the way you sold anything.

We talked about continuing education for the practitioners in the dealership. We certify all of them because they all have a role in compliance. Just as they need to stay on top of the situation, we do as well. Continuing education is the key.

AE: Now that I’m certified, how do I get recertified?

Van Over: Every year, on the anniversary of your certification, you will receive a notification from ACE that you need to log in and take a smaller number of modules to stay certified. There are five we have identified that should be done annually: Safeguards Rule, Red Flags, sexual harassment, discrimination and ethics. Additionally, every year, we will add any modules that have been added to your discipline’s curriculum.

Finally, if you’re a gvo3 client, you are getting regular periodic reviews, and we will include areas where we see the highest area of noncompliance. If we find the highest percentage in the completion of credit applications, for example, we’ll include that module and do it again.

This demonstrates that, not only are we keeping you current on recent changes, we are also reviewing deal files, identifying failure points and retraining on that. With that documentation, the dealer has a strong case if someone leaves and blows the whistle. Sorry, but you were trained. We showed you how to do it the right way.

AE: Is it possible to be fully compliant and still be unethical?

Van Over: You can have paperwork in the deal that suggests you did things the right way. But, yes, you can still be unethical. And if you are, eventually, it’s going to catch up with you. We have a philosophy we share with dealers in our recap meetings: If you’ve made mistakes, it’s one of two things: You are naïve or you’re a kink. I can fix naivety. If you’re a kink, and you’re forging signatures and packing payments, and you think that’s acceptable, your moral compass is off. I can’t fix that.

AE: How often have you had to recommend that a dealer fire a bad actor?

Van Over: It happens occasionally. But it’s happening less and less, and we’ve moved along further into the progression of the company. When we develop a policy and procedure manual for our clients, we include a list of eight or nine non-negotiables. If you violate even one, you’re terminated. If you forge a document, you’ve got to go. If you steal money, adios.

However, we make absolutely certain we’re an independent contractor. We are not making decisions on behalf of the company. We might point out that it looks like someone else signed this document, and the dealer will investigate that. Many times, if they can get someone to admit to it, they do terminate them.

AE: Our readership is agents, so let me ask you: What responsibility do agents bear for keeping dealers in compliance?

Van Over: Agents do not want to be the dealer’s compliance cop. We’ve made that very clear. We work with more than a few agents, either on a referral basis or when we have been retained to be the compliance cop. We tell them to be sure their processes are compliant. Train on the menu from both the sales and compliance perspectives.

But you don’t want to be the guy reviewing deals. Focus on production. If your dealer needs a compliance expert, there are a number of us out there, and some of us do a very good job. Get somebody to be your compliance cop. Agents are there to help dealers make money. That’s what they’ve got to focus on.

For more information about ACE certification, visit AceCert.org. For more information about gvo3 & Associates, visit gvo3.com.

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An Interview with Jimmy Atkinson

An Interview with Jimmy Atkinson

At Agent Summit in May, Jimmy Atkinson continued a long career in public speaking when he joined “Building a Team Theme for Prosperity,” a panel discussion led by Tom O’Neil of O’Neil Financial Services Agency. Upon returning to his adopted hometown of Napa, Calif., the COO of AUL Corp. met with AE to reflect on his work in retail and as a trainer, product provider, marathon runner and long-suffering Braves fan.

AE: Jimmy, it was great seeing you at Agent Summit, and I enjoyed your panel. Great energy, great content, and O’Neil did a nice job as the moderator.

Atkinson: Tom did a terrific job. He was probably the most engaged moderator I’ve worked with. We drilled down on the questions on multiple calls and had a final prep session before we went onstage. Everybody on the panel had a good time.

AE: Do you enjoy public speaking?

Atkinson: I do. I spent about five years just doing training and another three or four years just doing F&I development. I started with MS Diversified, which was later acquired by Assurant Solutions, and then worked with Joe Verde for four years. I started my own training company in 2001. I found I had a real passion for teaching and sharing information. By the way, when I started at Joe Verde Group, the first person to take me under his wing was Dave Anderson.

AE: The same Dave Anderson who spoke at Agent Summit?

Atkinson: The same. And I gained a lot of confidence through that experience. It’s always great to see Dave and listen to his powerful message.

AE: What was your first job in the auto industry?

Atkinson: I started selling cars in March of 1983. Pugmire Lincoln Mercury, in my hometown of Atlanta, had an ad running in the newspaper. I actually replied to the ad at their Chevrolet store down the street. The sales manager at the Chevy store said, “You’ll never make it in the car business,” so I walked down to the Lincoln store.

AE: If only he knew.

Atkinson: Well, I was a bit more shy and introverted at the time. And it was only a 10-minute interview. But I caught on and moved into F&I after 18 months. Then I was promoted to sales manager and then general sales manager. I spent seven years at three dealerships. From there I went to work for MS Diversified as a regional manager and training director — the same work that agents do, but as a direct employee.

About four years into it, I got involved in F&I training. When I started my own company, I figured I would be a trainer and have a few products. In 2002, I received a call from my old boss at MS Diversified. They had been acquired by what was then Assurant and he asked me to rejoin him there.

AE: When did you make the move to AUL?

Atkinson: That was in July of 2010. Luis Nieves, the founder, was a client and friend through Assurant. He called me and said, “I would like to visit with you. I have an idea.” We met and he said he needed someone to come in and be his No. 2.

AE: And that was a big move, leaving Atlanta for the Wine Country.

Atkinson: It was. We had moved around a bit before that, but I was born, grew up and spent most of my life in Atlanta.

AE: I learned most of what I know about Atlanta from “A Man in Full” by Tom Wolfe.

Atkinson: I just read that a few months ago! The way he paints Atlanta is probably pretty accurate. It’s a great city, but you get the sense it’s always trying to prove itself. It is home to a ton of Fortune 500 companies, so it’s always growing and expanding, and that brings a lot of challenges. But I love it because it’s home, and of course I still love the Braves, Falcons, Hawks and Bulldogs. You can’t learn to appreciate the meaning of loyalty and heartache until you follow teams that have lost so many championships.

AE: Actually, I’m from Buffalo, so …

Atkinson: Oh, that’s right.

AE: Let’s move on! We had a nice visit in Napa a few years back. What is it like to live there?

Atkinson: It’s very different. There are things I miss about living in the South, but California is a beautiful state. And people don’t realize this about Napa, but it’s like a small farming town, only with hotels and restaurants and tourism. When I think about living in Atlanta, I picture myself either being at the airport or fighting all the traffic, so the relaxed atmosphere is welcome.

AE: Still, it must have been difficult to leave.

Atkinson: It’s never an easy decision. It was made easier because we have two sons who were grown and moving to Los Angeles at the same time. That’s only a one-hour flight. We moved a couple times when the boys were growing up, and that was probably tougher on them than I’d like to admit. Thankfully, I have the greatest wife and mom in the world, and the boys are now wonderful young men.

AE: What do you do to stay in shape?

Atkinson: I ride a Pinarello road bike sometimes, and I’m terrible at golf, but mostly I run. I’ve been doing it for about 18 years. I have run four marathons and a bunch of half-marathons, including two with my younger son. It relieves stress and gives me solitude when I need it.

AE: Running in Napa must be a lot more comfortable than running in Atlanta.

Atkinson: If you’re training for a fall marathon, you’re running up to 18 miles in the summer. So, yes, climate-wise, it is better in Napa. But both cities have a lot of hills.

AE: How much do you love working with agents?

Atkinson: I do love agents. It’s kind of wild. They’re such a different breed. Not unlike car dealers. They are the masters of entrepreneurship and truly brilliant in their fields. They have that amazing ability to adapt to change and grow their businesses. It’s a neat group of people.

AE: Are you looking for more agents? How does that process work?

Atkinson: Jason Garner, our general sales manager, heads up agent acquisitions. He has a team of business development managers. We’re pretty selective. But if we have an area where we’re underperforming and want to grow, and if we don’t have an agent there, we will look for someone. But we have a very stable agent force. We still have the first agent we signed and the first dealer we signed.

AE: That’s impressive.

Atkinson: It’s all driven by Luis, who founded the company and created this wonderful culture. He is probably the most humble, generous and appreciative person I’ve met. He would give you the shirt off his back. He always believes in doing what’s right, and that’s the real secret.

AE: So what drives you now? What gets you up in the morning?

Atkinson: Well, first, there’s always a million things to do. Second, it’s exciting. You asked about agents. That’s one of the most exciting parts of the job. They bring unique opportunities and problems to solve. One of the things we strive to be is a company that agents can turn to for a new approach and we think we do a lot of it really well. At the same time, you have to find a way to create new value. It’s a tremendous business, and it’s growing. There is nothing I would rather be doing.

Posted in Meet the Trainer1 Comment

Agent Summit 2016 Motivates and Inspires

Agent Summit 2016 Motivates and Inspires

On May 9, agents, agent principals, executives and trainers convened at the Venetian Palazzo in Las Vegas for Agent Summit 2016. The event, which attracted about 1,000 industry professionals, included more than two full days of educational sessions, networking breaks, meals and receptions.

As in years past, the agenda was built upon the agency and dealer development sessions the event has become known for. Many of those workshops and panel discussions will be covered in detail in upcoming issues of this magazine. In this article, we will take a closer look at some of the speakers, sessions and networking opportunities that were unique to this year’s show and left a lasting impression on attendees.

Agent Principals Only Breakfast & Roundtable

Last year’s Agent Summit included the first Agent Principals Only session in the event’s brief history. It was such a big hit, organizers decided to expand its time slot and move it to the very beginning of the agenda.

The Agent Principals Only Breakfast & Roundtable began at 8:30 a.m. on Monday, May 9, with a half-hour breakfast. Agent principals in attendance were seated with owners of other agencies of like size and encouraged to discuss common opportunities and challenges.

Mike Godin, owner of Godin Dealer Services in Albuquerque, N.M., had one complaint about the breakfast: It wasn’t long enough. As the owner of a small agency, he says he attends Agent Summit to pick up new strategies for business development and values the opportunity to spend meaningful time with his peers.

“In an open forum like that, you tend to get two or three people who ask questions of the advisers up there, and sometimes it seems that it mostly applies to what the larger agencies are doing,” Godin says. “So sitting around a table with other agents and agencies of like size, to me, proved more beneficial.”

The breakfast was followed “From the Box to the Brand Sign, a 47-Year Journey,” a rousing address from V. Andy Gill, who began his automotive industry career in 1969 as one of the country’s first F&I managers. Gill would go on to form an agency, buy and sell three new-car dealerships, and, last year, join a mergers and acquisitions firm. Along the way, he has collected a lifetime of stories, many of which he shared with the Agent Summit crowd.

The Agent Principals Only portion of the agenda concluded with a panel comprised of Randy Crisorio, chief executive of United Development Systems (UDS) and chair of the Agent Summit advisory board, John Braganini of Great Lakes Companies, Joel Kansanback of Automotive Development Group (ADG) and Dealer Commitment Services’ Glen Tuscan. The high-powered group touched on a number of issues relating to agency ownership, hiring and recruiting, dealer acquisition, regulatory compliance and more.

“Agent Summit is one of the few opportunities in the F&I industry where you can meet and collaborate with all of our colleagues and competitors in one collegial setting,” says Tom O’Neil, owner of O’Neil Financial Services Agency, an Agent Summit regular and a panel moderator at this year’s event. “Everyone seems to let their natural guard down to enjoy the sharing of information and camaraderie.”

“I always find two or three issues that come down the line I haven’t thought of, seen yet, done yet,” Braganini adds. “The agents are always interested in sharing what they’re doing. Nobody seems to have any secrets anymore.”

Dave Anderson and David Horsager

On Tuesday and Wednesday morning, Agent Summit attendees were treated to stirring motivational addresses delivered by Dave Anderson, president of Learn to Lead, and David Horsager, bestselling author of “The Trust Edge.”

“I loved all the sessions. I especially loved the hired speakers, Dave Anderson and David Horsager,” says Brian Crisorio, UDS’s vice president of marketing. “Their message goes beyond success in the workplace and can have positive effects on life in general.”

Anderson’s address, which was sponsored by EasyCare and GWC Warranty, began at 9:10 a.m. on Tuesday, March 10. In “How to Master the Art of Execution,” Anderson didn’t draw exclusively from his experience in the auto industry — which includes management of several highly successful dealerships — choosing instead to touch on themes applicable to any business, personal goal or charitable endeavor.

“Dave Anderson is obviously one of our favorites. He just gets the point across quickly and efficiently,” says Larry Dorfman, CEO of APCO and the EasyCare brand. “He always causes me to look in the mirror and be honest regarding how well I am holding myself accountable to help others be accountable.”

“Anderson was terrific, no question,” adds Greg Gomer, president and owner of Boston-based Finance Solutions LLC. “He is always a pleasure to listen to.”

On Wednesday morning, David Horsager took to the stage to deliver “The Trust Edge,” a fast-paced, high-energy rundown of the principles behind his bestselling book of the same name. Horsager explained how trust is a precious commodity that can only be mined through honesty, accountability and gratitude.

“Listening to David Horsager speak, I couldn’t help but think about all my closest friends and business partners and the amount of trust equity we have built in each other,” says David Gesualdo, Agent Summit show chair and publisher of Agent Entrepreneur and F&I and Showroom. “I imagine everyone in the room felt the same way. It was an incredibly moving session.”

NADA’s Andrew Koblenz

What interest do agents have in regulatory compliance? Plenty, according to Andrew Koblenz, a longtime National Automobile Dealers Association (NADA) executive who currently serves as the organization’s executive vice president of legal and regulatory affairs and general counsel. For as long as agency revenue is driven by the sale of F&I products, there will be a pressing need for agents to help dealers create, implement and maintain processes that are compliant with the maze of regulations enforced by federal regulators such as the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC).

“The session on compliance was extremely helpful as our business development managers look to assist the dealers in the educational process,” said Rod Heasley, president and CRO of KISS Concepts Group in Fairmont, N.C.

Koblenz presented “Solving the CFPB and Fair Credit Risk Problem” at 10:30 a.m. on Tuesday. His presentation, which was followed by a lengthy question-and-answer session, included a review of recent regulatory actions, steps banks and finance companies have taken to mitigate or eliminate risk, and new rules agents and dealers should follow. By acknowledging the CFPB’s concerns and self-policing, Koblenz argued, the industry can remain compliant while preserving the F&I process — which is of benefit to car buyers as well as retailers and providers.

“The whole industry should be taking note of what the agent brings as far as profitability, compliance and training. They deserve more recognition,” Tuscan says. “It’s great being surrounded by people who have their fingers on the pulse. I can’t get enough.”

Technology Sessions

Several attendees identified the two technology-focused sessions as among the most memorable of this year’s show. The first, “Next-Level Product Sales,” was delivered by Mike Burgiss, founder and general manager of MakeMyDeal, on Monday afternoon. It was followed by “Technology on the Move — New Horizons,” a panel discussion helmed by Randy Pazik, president and owner of Accelerated Profit Technologies.

“Certainly the sessions on technology are beneficial, because that’s a moving target,” Godin says. “We need to know how the providers are developing it and employing it in dealerships.”

Burgiss, who is an advocate of making more information about F&I products available online, says he realized speaking about a topic that can spur heated debate would be a challenge.

“As someone that’s focused on technology, I often get misunderstood as someone portraying the idea that technology can replace face-to-face interaction,” he says. “There’s no replacement for live interaction, just like there is no replacement for a live business manager in the sale of a vehicle and its associated aftermarket products.”

Instead, he argued, bringing parts of the F&I process forward can improve production by helping the finance office keep pace with the rapidly changing demands of car buyers. He says the agents in attendance offered “good engagement” and were receptive to his message, and the reviews back him up.

“Hearing the presentation from Mike Burgiss and speaking with other technology providers, it is clear that those guys are really working hard to stay on top of their game,” Brian Crisorio says. “Several years ago, the reaction would have been, ‘We don’t have to worry about that.’ The best point I’ve heard is the drive to put good information about F&I products and pricing online. If you don’t, all your customers are going to see are the complaints and negative information.”

Burgiss was immediately followed by “Technology on the Move — New Horizons,” for which Pazik was joined by StoneEagle’s Thomas Elliott, Kumar Kathinokkula of F&I Administration Solutions, Tony Luciano of Allstate Dealer Services, MaximTrak’s Jim Maxim Jr. and Carrie Profaizer of Protective Asset Protection.

In addition to discussing their companies’ latest efforts in the dealer technology space — including the showroom as well as the finance office — panelists discussed how the role of F&I professionals could change and grow.

“We heard in this exchange the same conversation that plays out in dealerships across the country,” Burgiss says. “The debate emerges between meeting consumer expectations through the use of online experiences versus the potential loss of control. Using technology as a communication platform leads to more engaged consumers who will buy more, and most importantly, allow dealers to maintain control of the deal structure and better manage their profitability.”

Networking and Exhibits

Demand for meeting space and exhibition opportunities forced organizers to open up the show’s floorplan by booking 13 private meeting rooms and opening a separate exhibit hall. Attendees agree the moves took the event’s networking opportunities to the next level.

“I think the show, every year, seems to step up and get better,” Godin says. “Certainly the venues are great and the separate exhibit hall was great. I would expect most of the exhibitors liked it.”

“If you had nothing but that, I could go out on that floor and, in two hours, I could talk to everybody that matters in our industry,” Braganini says, adding that he connected with 10 new providers in the expo hall and spoke with a number of industry professionals who were in transition and looking for their next opportunity. Finally, he adds, he picked up on a new theme: “The agent channel is consolidating, quickly.”

Gomer agrees, noting that it was “amazing” to hear how many attendees were looking for agencies to acquire.

Asked whether the new contacts he made justified the cost of the trip, Dorfman says he doesn’t measure Agent Summit in terms of immediate returns.

“We made some great contacts and have continuing conversations going on with some new opportunities, so that’s great,” he says. “Just as importantly, we had some valuable time to meet up with current partners and others we know and spend some time talking about the business.”

“This is such a small fraternity of F&I agents that the meeting feels more like a reunion,” O’Neil adds. “It is always interesting to see where everyone is coming from and where their businesses will be going forward.”

Braganini agrees, noting that the event offers agents of any size a unique opportunity to keep pace with their partners and competitors in a business that has, in recent decades, been subject to sweeping changes at every level.

“If you don’t go, you reposition yourself in the industry and in the overall food chain. Our industry is highly dynamic. It’s constantly changing,” Braganini says. “You can look to printed media and email and different things like that as a source of maintaining your level of awareness, but there is no substitute for spending three or four hours talking to your peers and your providers. … When I go, I don’t know where or why it happens, but I always leave with three or four takeaways that pay for the trip 25 times over.”

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