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The Agent’s Guide to Hiring Effective F&I Managers

Among the many facets of the value proposition agents bring to dealers is their ability to help recruit F&I managers. But this is no small task. Real talent is hard to find, and the agent should also therefore ensure that new talent is not wasted or lost by a dealer not having a process in place to train and continually motivate new hires.

To learn more, we turned to the experts. Shelley Boggan-Kirchner of GSFSGroup, Great Lakes Companies’ John Braganini, Brian Crisorio of United Development Systems Inc. (UDS), Harlene Doane of DealerStrong and Automotive Development Group (ADG)’s Bill Kelly all weighed in to help answer three key questions: Where should agents look for candidates, what attributes should they look for, and how can they help put them on the path to success?

1. Where to Look

Most of our experts agreed that although the traditional path from the sales floor to the finance office continues to yield excellent results, agents and dealers would be remiss in failing to expand their search. With that in mind, we discussed a few primary sources to focus on, each with its own pros and cons:

  • Internal candidates: Do not overlook the employees already working in the dealership, particularly especially those who make known their intentions to move to F&I. In fact, this remains one of the best sources to start with, the experts say.

“Top-producing salespeople and sales managers are good candidates,” says Braganini, principal of Portage, Mich.-based Great Lakes.

“We always like to look within the organization first, as there are often a number of qualified candidates itching for their shot at being the almighty F&I Manager,” says Brian Crisorio, vice president of marketing for Clearwater, Fla.-based UDS.

In fact, Crisorio adds that he advises dealers to invest in F&I training for promising salespeople — even before a job becomes available. This strategy demonstrates a commitment to the individual on the dealer’s part, giving them a clear path to advance. It also creates a roster of qualified workers who can step in when needed, be it for a particularly busy afternoon or on a more permanent basis.

  • External candidates: Agents should be constantly on the lookout for experienced F&I managers who may be looking for a change of scenery. One good way to do that is to make sure every dealer client has a career portal on their website. But Shelley Boggan-Kirchner, the executive in charge of the Hiring Winners platform for Houston-based GSFSGroup, says dealers may want to make their intentions known in a number of ways, including asking customers for candidate referrals and conspicuously posting recruiting materials in the store.

“When we go into a dealership, we bring in marketing and recruiting materials,” Boggan-Kirchner says. “We give them signage they can put up — be it at the receptionist desk or customer waiting areas — saying, ‘This is just to inform you we’re always looking for great people. Feel free to visit our career portal.’ We also give it to them electronically. So if they want to take that link and attach it to a community job board, they can market it directly to community colleges and vocational schools.”

This strategy allows the dealership to constantly evaluate and recruit new talent, she adds, so there is never a crisis when someone decides to move on to another opportunity.

  • Outside-the-box candidates: Our experts agreed that smart, ambitious, hard-working professionals in other fields can become effective F&I managers — if you can find them. For all the time and money dealers spend marketing to find new customers, for many, the idea of creating a similar campaign to find outside-the-box candidates remains foreign. For dealers who are focused on the day-to-day operations, taking the time to actively and continuously recruit can be a daunting task. Agents who can weed through and identify the next potential stars — of F&I, sales, customer service or any other part of the dealership — can become invaluable partners. They just have to know where to look.

“Qualified candidates can come from a variety of sources, and those sources often vary from market to market,” stresses Harlene Doane, COO of DealerStrong, based out of Evansville, Ind. She also notes that other sources, such as local job boards, and social media sites like Facebook and LinkedIn are also good places to hunt for candidates.

From traditional sources, such as the local newspaper, to online resources like Monster, CareerBuilder and Indeed, dealers have a number of opportunities to advertise their stores as friendly, productive work environments with the potential for a six-figure income. The downside, of course, is managing a presence on multiple job sites and sifting through the reams of applications that result.

“You will have to look at many more candidates and applications if you’re only recruiting via the Internet than you will if you’re collecting referrals,” Boggan-Kirchner notes.

Agents can help by managing this process on their dealers’ behalf and making sure the ads paint a realistic picture of life in the box, including the long hours and weekend shifts. That description can prove attractive to graduates of colleges and technical schools, who may be willing to sacrifice personal time in order to enter the workforce in a high-paying position.

Of course, like other outside-the-box recruits, recent grads will come in without the benefit of relevant training and experience. That’s where screening for aptitude, ambition and a willingness to learn and follow a process take on added importance.

“What we look for are people that have certain characteristics that we feel will be the most successful,” says Kelly, a partner at Bloomington, Minn.-based ADG. “Oftentimes, they are people with a proven track record, but sometimes we do come across the right individual that we believe we can train on our trademarked Proactive Selling System.”

2. What to Look For

It is not enough to simply look for any candidate that walks through the door. It takes a certain blend of skills and attitude to be a great F&I manager, so agents focused on helping dealerships recruit the right people need to ensure they are identifying certain key traits.

  • Coachability: One of the first traits to look for is a willingness to learn the F&I process and stick to it. Every dealership will have its own set of rules and procedures that F&I managers will be expected to follow. New hires need to be willing to learn and adapt to that process, whether they are green peas or seasoned professionals.

“With all of the compliance laws and moving parts, a business manager has to have structure and be able to work in a very structured environment,” Kelly stresses. “We are not looking for an individual to go out and create their own way. When the proven path is followed, we have the best results.”

  • Professionalism: Even the most knowledgeable F&I manager will struggle if they do not look, walk and talk the part. They need to be able to put consumers at ease and be capable of guiding them through the entire process. If the F&I manager doesn’t inspire trust, they will not get very far.

“We are always looking for someone that not only possesses the general knowledge, but also has the look,” explains Crisorio. “The ideal F&I manager will present himself as a trusted advisor who is qualified and prepared to help the customers navigate the details of a vehicle purchase. They should also demonstrate a team-first attitude and strong leadership qualities.”

  • Intelligence: F&I managers must build a working knowledge of terminology, deal structure and federal, state and local regulations, often in short order. Does your latest recruit have the brainpower to guide customers through the F&I process and keep the dealership out of trouble?
  • Character: F&I managers assume a powerful position in the dealership. They will regularly face situations that will test their ethics, and ensuring their level of morality matches that of the dealership is a key trait. This can be screened for with examples of real-life situations that came up in the hiring dealership, and then having the candidate explain how they would have handled it. This gives a good baseline for how well they will fit into the dealership’s expectations of its F&I managers.

“Some dealers are more comfortable with the gray lines than others, so the character needs to be in the same circle as the dealer’s expectations,” notes Doane. “Character also comes out in reference checks, if conducted properly.”

  • Chemistry: This is perhaps the hardest trait to screen for. The F&I manager will be working with every member of the dealership staff on a daily basis, and it only takes one bad apple to disrupt the entire culture. Agents rarely have the opportunity to work with new personnel on a daily basis, so the dealer’s expectations must be perfectly clear. The dealer principal should have the final say in all new hires, and, assuming the agent has brought them all highly qualified candidates that meet every other criteria, this should be the one trait they focus on the most when making the final decision.

“You want to be sure the person you’re hiring is oriented to the culture,” Boggan-Kirchner says. “You’ll get a lot of information about their character during the due diligence of the hiring process. But once the dealer has made that decision, the work they do needs to be reflective of the culture. I think it’s important that, from the moment people enter into the dealership, it should be emphasized that it’s a career, not just a job.”

One thing all of the experts agreed on was that, while finding someone with previous F&I training is always a good thing, it isn’t necessarily a requirement. Many of them stressed that either going the internal route, hiring experienced sales people who are looking to move ahead at the dealership, or young graduates just out of school who are blank slates, can both be very compelling options. The first comes with knowledge of the industry, the vehicles and the customers that the dealership serves, putting them one step ahead of other candidates. And hiring graduates means not having to undo training or bad habits picked up somewhere else. They can be taught exactly how this dealership does it, right from the start.

“I like both,” says Boggan-Kirchner. “If you hire experienced personnel, that usually means less down time and acquiring a person with a proven track record. Hiring inexperienced requires utilizing broader recruiting methods, having a commitment to training and utilizing performance assessment tools like Hiring Winners.”

Crisorio agrees, noting that an openness to training is, in the long run, more important than previous F&I experience. Although, he says, having automotive experience of some sort can certainly help. “The experienced individual must prove to be coachable in order to adapt to the processes and procedures that a dealer group has in place. Someone new to the F&I office must share the same trait and welcome the guidance that a reputable F&I company and dealership management will provide. That will give them the best chance at a successful career.”

“We all want to think we’ll get the guy who’s going to come out and run $1,200 per copy,” says Boggan-Kirchner. “But what are the characteristics that will make that person able to do it? You want somebody who’s got drive and ambition. You want somebody who’s motivated by their own performance.”

3. How to Prepare for Success

It doesn’t matter if it is the perfect candidate, or whether they are brand new to F&I or seasoned pros, every F&I manager should get the education they need to start strong and commit to regular, ongoing training to ensure they always perform at the top of their game.

Braganini might look for candidates who have a proven track record in either F&I or automotive sales, however, he notes, that doesn’t stop him from training them. “Both [experienced and new hires] need to complete our basic and advanced FSM schools, complete a development specialist assignment with one of our trainers and maintain strict adherence to our sales process and core competency system.”

“An experienced F&I manager must become familiar with the products being offered, as well as the selling system utilized to offer those products, so menu training and product knowledge training is a must,” stresses Crisorio. “Regarding the inexperienced F&I manager, additional training would be necessary in the areas of compliance, lender relations and objection handling, to name a few.”

“You are never too experienced to receive training,” says Kelly. “We emphasize weekly training for everyone. Someone that is newer to the job will require offsite, multiday F&I development training. All of the offsite training is followed up with in store one-on-one and online classes. Every week, the best business managers make time to improve themselves.”

It is important for the dealership to set expectations early in the relationship, and then give the F&I manager the tools and knowledge they need to meet and exceed those goals. It is not, however, enough to simply have a list of vague statements that are only pulled out when it’s time to do the annual evaluation. “Once the expectations are set and goals are formed, a daily action plan needs to be followed and a six-month trend report should be implemented to track the progress,” Kelly says.

“It depends on the store and market, but goals should all be written, tracked and have consequences,” agreed Braganini. “Assigning a development specialist to the store to ensure performance compliance will ensure the candidate can succeed.”

It is important for agents to manage the dealer expectations, as well. No matter how experienced a new F&I manager might have been before joining the team, there will be a learning curve when it comes to the exact processes and products the dealership uses. This is another area where training will make a big difference. If the dealer is willing to let the agent get the new hire all the training they need prior to their first day in the office, the chances of their success — and the dealer’s — goes up exponentially.

“While it may be understood that a learning curve will exist, especially with someone new to F&I, the targets established are, well, the targets,” notes Crisorio. “As the chosen F&I partner to our clients, we accept the challenge to ensure an individual is ready to succeed on day one. Realizing success immediately is certainly not guaranteed, so I would encourage any dealer to lean on their F&I company to provide dedicated support, giving that new manager the best chance at success.”

In fact, Kelly believes agents play a critical role in this entire process. “Be a coach and always have a game plan when working with a finance manager,” he advises. “Set the objectives and always bring something of value to each session. I very much believe that it is an agent’s responsibility to develop the finance managers. Contract count is nice, but PVR is the measuring stick.”

The further an agent is willing to go to help dealers find effective F&I managers, Boggan-Kirchner says, the more valuable they will become.

“I think that it behooves everybody for the agent to be involved in the recruiting, hiring and training process,” she says. “I think agents should act as consultants to the dealer for anything F&I-related. I also think it’s a selling point for the agency to have good F&I manager development. And I think that when you have an agency that does that, it stands out.”

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The Benefits of Biweekly Payments

Most agents know that biweekly payment programs offer dealers the opportunity to reduce their customers’ interest cost over the life of their auto loan by prepaying a small amount of the principal each month. But some may not be aware of the many additional advantages biweekly programs bring to a dealer’s F&I product lineup — for lease customers as well as finance customers.

To fill in the gaps, Agent Entrepreneur spoke with four leading executives in the biweekly segment: David Engelman of SMART Payment Plan, Equity 4 U Inc.’s Mike Hull, Lynn Simmons of Economic Advantages Corp. (EAC) and US Equity Advantage’s Robert Steenbergh. We learned that proper presentation is the key to getting biweekly payment programs on more menus at more dealerships.

Extolling the Virtues

First and foremost, the executives we interviewed agreed that agents should stress to dealers that these products carry significant benefits to end users and give them options that they might not otherwise have access to.

“Compared with many aftermarket products that customers purchase, where they may never experience the benefits, our program delivers benefits for the entire duration of our service,” says Lynn Simmons, president of Economic Advantages Corp. (EAC) in Sheldon, Vt. “In addition to added revenue to the dealer, a satisfied customer who has paid off their loan faster is a customer who returns to purchase their next vehicle sooner.”

The fact that biweekly payment programs benefit both the dealer and the consumer is a point David Engelman, CEO of Naples, Fla.-based SMART Payment Plan, stresses as well. “Our agents focus on providing dealers with a proven, reliable system for offering car buyers smaller and easier payments. Properly implemented, our smaller and easier payments can transform a dealership’s sales process. Agents and dealers want products and services with a proven demand and tangible benefits.”

“Above all else, agents need to verify that the company is licensed to transmit money, or is an authorized delegate to do so in the dealer’s state,” notes Robert Steenbergh, an attorney and president and CEO of Orlando, Fla.-based US Equity Advantage. “This is more than a benefit; it is a must. Agents should also do their due diligence to verify if the company’s banking relationship is with a reputable institution and whether it is a direct relationship or if there is a third party between the bank and provider. Other benefits to consider include the level of customer service and dealer support offered by the company and its experience in automotive.”

Mike Hull, president of Lamar, Mo.-based Equity 4 U Inc., points out that, for agents and dealers alike, making a profit on F&I products is only going to happen if there is room in the customer’s budget to add products in the first place. It doesn’t matter how much the customer might want or need those products, or how much it might save them in the long run, if they cannot afford them.

“[Biweekly payments offer] a turnkey solution that 100% of the time brings the dealer’s customer back in owing less money to their respective finance source than a conventional monthly payment schedule,” he says. “That benefit pays huge dividends to all parties involved. For example; using a $25,000 car at an average interest rate, the customer trading out of a 72-month loan in 42 to 48 months — in 2018 — from the time of sale will owe around $1,200 less to their bank. That $1,200 may be the difference in making the deal or not making the deal.

“If the customer is upside-down, now the dealer has to deal with getting an on the new loan, setting up an even higher negative equity situation on the next deal, if the banks will even let them,” Hull adds. “Now take that $1,200 and multiply it by 50, 80, 100 trade-ins per month, multiplied by three years. The benefit to the agent and dealer in 2018, 2019, 2020 and beyond now stands in the millions of dollars that the dealer can use to make more deals with.”

To sell the product to car buyers, Hull adds, agents should be sure F&I managers are able to explain the financial benefits over the life of the loan. “All customers should have a debt reduction plan that they can execute. F&I managers should focus on the seamless equity benefits as it relates to the customer’s budget, produced by setting up a biweekly debit schedule. We provide the F&I manager with an amortization schedule showing the equity build up at all stages throughout the loan term. The F&I manager should be able to explain the impact of increased equity once the customer decides to come back and trade or even sell their vehicle outright.”

“F&I managers should focus on the benefits our customers value about our service — convenience, smaller payments that match their paydays, paying off their loans faster and eliminating bill payment hassles and late fees,” Engelman notes.

“It’s also important to offer this payment option to all customers who are financing their vehicles,” Simmons says. “Different customers may have different reasons for their interest in this program. With today’s busy schedules, for instance, ease and convenience can make a big impact for many. For those who don’t budget themselves well, having their payments consistently made on time helps to keep them on track.”

As with all products in the F&I office, ensuring that every customer has a chance to learn about biweekly payments and how the product could benefit them is crucial. “What’s important to one customer may not be the same for another,” Simmons continues. “The F&I manager cannot know what that would be and should, therefore, always offer the option with its costs and its benefits. We also know that although people could make additional principal payments themselves, most of us do not have the self-discipline to do it on a consistent basis. Ultimately, it is the customer’s determination as to what the value is for them. In the interest of full customer disclosure, it should be offered to all.”

“I believe there is a value statement for every customer,” Steenbergh says. “It could be to get out of a negative equity situation, to build equity sooner in the life of the loan, to owe less at trade-in, to pay off the loan early, to save interest, or any combination thereof. Even if a customer has a low interest rate with a term between 60 and 72 months, paying that vehicle off faster provides tremendous value in the equity of the vehicle at the time of trade. It is our job and the role of F&I to educate customers about the benefits of biweekly as well as any out-of-pocket costs, and let them make the decision to purchase.”

“Benefits such as automatic debits and ease of budgeting begin immediately,” notes Hull. “With proper disclosure, our service should be offered to all customers who are financing. Each individual customer will have different wants and needs, as an F&I professional; you should let the customer decide which products or services fit their needs.”

“Every customer achieves convenience: smaller automated payments that match their paydays, faster loan payoff, eliminating bill payment hassles and late fees,” says Engelman. “Even lease customers achieve benefits. And, when customers add mortgages and credit card payments, we can help our customers reduce interest charges. Every finance and lease customer should be given the opportunity to match a smaller payment to their payday and be fully informed about all additional benefits and costs.”

Know the Options

For agents, all four of our experts lead companies at the top of their game when it comes to biweekly payment products. But while they offer very similar programs, they each take approaches that set them apart from the competition. Before deciding to include one over another in the product mix an agent offers to their dealers, knowing what those differences are is key.

“Fundamentally, all biweekly payment services apply the same basic logic: You debit the customer’s account every two weeks in an amount equal to half of their monthly payment,” says Steenbergh. “This equates to 26 half debits per year (or 13 full months’ worth of payments). The additional monthly payment is initially used to pay fees and, in subsequent years, the extra amount is sent to the lender and applied to principal. Small differences exist in such things as flexibility in the debit schedule, the timing of sending lender payments, ancillary fees charged, and pricing and commission structure. More notable differences exist in areas such as licensing, corporate structure, bank partners involved in the handling of funds, and the levels of customer and dealer support that are provided.”

He went on to note those small differences that set his company apart. “I founded US Equity Advantage simultaneously with MenuVantage in 2003. The company is among, if not the industry’s oldest and largest provider. I believe our name is synonymous with an insider’s understanding of the car business and menu-presentation because biweekly was a large part of MenuVantage’s success. We are also committed to our customers and doing what is right for them; whether it’s the end customer or our dealers and agents. In addition, USEA holds the most state money transmitter licenses, by far, which only strengthens our market position.”

“Client payments are made on a schedule to match their pay days,” Simmons says of her company’s approach. “One additional payment is generated over the course of each year. These funds are sent to the lender to be applied against the principal portion of the loan. This accelerates loan payoff, providing additional benefits to the client such as a decrease in interest paid, accelerated equity in the vehicle, increased trade-in value, structured budgeting and the convenience of timely automated payments with online tracking and assistance from experienced customer service reps, providing stress free support. ‘Bi-Auto PriorityPay’ also enables our clients to add other debt, such as mortgages, credit cards and student loans, for the only roll-down program which provides additional significant savings by paying down higher interest obligations first.”

“Equity 4 U sets customers up on an electronic debit schedule that will generate additional payments to be used as principal reduction to accelerate the loan payoff,” notes Hull. “Where we like to stand out is with the customer experience. The Equity 4 U positive customer experience will in turn highlight another reason to return to the selling dealer. Our customers enjoy the benefits of our superior domestic customer service department, automated activity updates and nonsufficient funds forgiveness that includes zero add-on costs to the program even if the customer makes an occasional mistake. In everything we do, we ask ourselves if this will help or hurt the dealers’ CSI score.”

“First, we are not a ‘biweekly payment company.’ We are a bill payment service,” Engelman stresses. “We pioneered and perfected matching automated bill payments to paydays. We focus on providing exceptional customer service, dealership training and compliance. We are the only company in the industry to employ a chief compliance officer, and are fully compliant regarding fee disclosures, contract terms, customer notices, training and sales materials.”

Leaving Controversy Behind

It is worth noting that while biweekly payments came onto the national radar in May 2014 with a memo from the National Automobile Dealers Association (NADA), our experts all agreed that, while it was frustrating at the time, it is now firmly in the past. The memo focused on the fact that the FTC was taking a closer look at these payments, and that the NADA itself had received inquiries. The memo warned dealers that biweekly programs could be susceptible to claims of unfair or deceptive practices, and suggested they should take care in selling them.

However, providers were very quick to point out that the memo failed to acknowledge all of the benefits of a biweekly payment program to a consumer; only reducing the amount of interest paid over the course of an auto loan was addressed. Benefits such as increasing the amount of equity in the vehicle faster, paying off the loans faster, convenience of scheduling payments to match payday cycles and never having to worry about late or missed payments were ignored in the initial memo. Overall, however, while the storm has long since passed, the experts note that it is part of an ongoing attack on the F&I department, and that they all learned something from it.

“I think a more accurate characterization is that biweekly is under review, and I suspect the entire F&I product line is, as well,” says Steenbergh. “Much has been made about the cost of bi-weekly programs compared solely to interest savings. That does not reflect a fundamental flaw in the service, but rather that the perception that interest savings is the only reason why a consumer would want to enroll in a service. Consumers pay for many conveniences in their daily lives and know that it comes with a cost. Think of ATM fees, pre-made food, personal trainers, lawn care and the list goes on. Automated accelerated payment programs are no different.

“Many people assume the only benefit of a biweekly payment program is interest savings. However, a statistically relevant customer survey we conducted in September 2014 revealed that paying off their vehicle sooner is the top reason customers enroll, followed by convenience and any interest savings net of fees,” Steenbergh adds. “These are solid value statements to disclose upfront along with all the costs and benefits related of the program.”

“While we did not lose any business because of that memo, I have heard that others did, which is unfortunate,” says Steenbergh. “It’s only natural for dealers to shy away from anything that is being looked at by the FTC, or any government agency, for that matter. For agents who live and die by their dealer relationships, no one wants to be the one who brings in a liability. So yes, I think the recent negative press has given some reason to pause, but this is not necessarily a bad thing. Sometimes it makes sense to step back, review your business and make sure you are aligned with the right partner and products/services for the long term. I wouldn’t expect agents to do business with us if we couldn’t prove our integrity and value.”

“There is no doubt the FTC inquiries and subsequent NADA memo has had an impact on the decision making process for both dealers and agents,” says Hull. “The NADA memo was profoundly more damaging, as it incorrectly drew parallels from one company (NPN) being investigated to the entire biweekly industry coming under siege by regulators. All companies and services go through increased regulatory pressure at some point; those who learn from the mistakes of others will emerge stronger than ever.”

“Naturally, negative headlines influence behavior and can create fear in the marketplace,” says Engelman. “However, dealers and agents who do business with us recognize our leadership role in addressing compliance, focusing on convenience, smaller and easier payments, faster loan payoffs, offering exceptional customer service and disclosure of total costs and fees. The agents and dealers that offer our service are familiar with the proven demand, our values, our people and our commitment to regulatory compliance.”

“We believe that the dealers and agents who have been properly and successfully marketing this payment option would and should not be discouraged. It was, however, a reminder for all concerned not to become lax with regard to disclosure,” notes Simmons.

However, all four companies have taken a more active approach in making sure they are ready should any regulatory agencies turn their eye on their products, specifically. Ensuring programs are compliant and up-to-date, with clear terms and fees stated up front has always been a priority, but now they are taking steps to ensure nothing got overlooked along the way.

“I believe all products and services sold at the dealership are and will be targeted by the CFPB,” says Hull. “We have prepared more in the last 12 months for increased regulatory pressure than we have the last 10 years. We have initiated internal and external reviews of all language in our materials, contracts and website to ensure we are fully compliant. As a result of these reviews, we have either completed implementation or are in the process of implementing updates.”

Engelman agrees. “Our focus has always been on helping people and providing exceptional service to consumers, auto dealers and agents,” he says. “We have the same level of focus regarding regulatory compliance. We hired a chief compliance officer, consulted with leading compliance attorneys and built a robust compliance department to satisfy regulators in the same manner that we’ve always satisfied our customers, dealers and agents.”

“As far as preparing for any review, we continually audit and update our written materials, advertising and training procedures for our in-house customer service personnel to make sure we’re fully compliant regarding disclosure and compliance,” says Steenbergh.

“We have always believed in the effectiveness of our program, how it helps customers to accelerate their debt payoff, to better budget their lives, to provide structure which helps to reduce their stress,” says Simmons. “We have enjoyed enormous customer loyalty over the 26 years we have been in business, with a record virtually devoid of consumer complaints. We have always disclosed all our fees along with all our benefits. We intend to continue to provide the excellent service that our clients expect and receive from us.”

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Texas Compliance Summit to Feature ‘Your Responsibilities’ Panel

AUSTIN — Organizers of the upcoming Texas Compliance Summit have announced that Tariq Kamal, managing editor of Auto Dealer Today, will lead a panel discussion entitled “Leadership, Teamwork and Accountability” at the event, which will be held Nov. 16–17, 2015, at the Hilton Austin Airport Hotel.

“We are counting on Tariq and his panel to shift our focus from the theoretical aspects of front-end compliance to the practical application thereof,” said David Gesualdo, show chair and publisher of ADT and F&I and Showroom. “We expect a hard-hitting discussion that will result in useful strategies and advice.”

The panel, which falls under the “Your Responsibilities” portion of the agenda, will be staffed by dealership personnel and experts from the compliance and F&I training segments. Kamal helmed a similar panel at the Midwest Compliance Summit in April.

“In Chicago, the conversation ranged from state and federal regulations to econtracting, deal-jacket audits and the Better Business Bureau,” he said. “We will reconvene in November to deliver the compliance content Texas dealers need and demand.”

Registration for Texas Compliance Summit is open at the event’s website. Attendees who register on or before Oct. 26 will enjoy a $100 discount. For sponsorship and exhibition opportunities, contact Eric Gesualdo via email hidden; JavaScript is required or at 727-612-8826. More information is available on the event’s website.

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Compliance Summit Panel to Highlight ‘Your Responsibilities’

CHICAGO — Organizers of Compliance Summit have announced that a panel has been convened to discuss “Your Responsibilities” at the Midwest event, which will be held April 20–21, 2015, at the DoubleTree Chicago O’Hare in Rosemont, Ill.

“This section of the agenda cuts to the heart of the question Compliance Summit was designed to answer,” said David Gesualdo, show chair and publisher of Auto Dealer Monthly and F&I and Showroom magazines. “What responsibilities do dealers, compliance officers and F&I professionals actually bear when it comes to front-end compliance?”

The panel will include JC Cramer, who serves as compliance director for Detroit’s Feldman Auto Group and spoke at the inaugural Compliance Summit, in Miami, last November, as well as Bill Kelly, a partner in the Minnesota-based Automotive Development Group (ADG). Kelly will discuss the role agents can and should take in ensuring compliance standards are taught and reinforced at their dealerships. The panel will be moderated by Tariq Kamal, managing editor of Auto Dealer Monthly.

“Our plan is to drill down to the compliance issues Midwest dealers face on a daily basis,” Kamal said. “We will tackle those issues head-on in true Compliance Summit fashion.”

More information about Compliance Summit, including registration and travel information, is available at ComplianceSummit.com. For sponsorship and exhibition opportunities, contact Eric Gesualdo via email hidden; JavaScript is required or call 727-612-8826.

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Training for Growth

On Monday, March 10, day one of the fourth annual Agent Summit concluded with “Training for Growth,” a panel discussion led by Lyle King. King is a founding partner with Forth Worth, Texas-based Auto Group Services. He started the discussion by assuring the crowd that the panel would not discuss “basic training,” choosing instead to focus on topics that would help attending agents bring value to their dealerships.

“If you are in the agency business, you are engaged, in one way or the other, with F&I training,” King said. “Whether it’s in the classroom, in the dealership, in the hotel next door to the dealership … it’s a basic tenet of what we do.”

King was joined by Craig Almon, a partner with PRO Consulting LLC in Tukwila, Wash.; Mike Marchione, the Washington, D.C.-based corporate director of training and development for Interstate National Dealer Services; Tony Troussov, director of training for Automotive Development Group (ADG) in Bloomington, Minnesota; and Chad White, national training director for Lee’s Summit, Missouri-based Mechanical Breakdown Protection Inc. (MBPI).

Management Training

King started the conversation by addressing an often-ignored facet of dealership development: participation from middle management; specifically, sales managers, general sales managers and F&I directors.

White stated that, as the market began to recover, mid-level managers complained about their struggles to hire and retain talented salespeople. White said he took that as a challenge and began to focus on teaching managers how to find and keep their best producers. “Dealers talk about ‘customers for life,’ and I think if we focus on getting managers to retain their best people, ‘employees for life’ falls under that as well. … We’re getting more deals back to F&I because we’re selling more cars.”

Marchione identified a systemic problem: Dealers send salespeople to sales training and F&I managers often attend F&I school; both groups are more likely to be sent to training in the early stages of their careers. When they become managers, their own education often stops, and they find themselves managing groups of students — but not their own students.

“At the end of the day, if they don’t understand and have not been exposed to the process we just trained their salespeople or their F&I folks on, how do they coach and counsel, and how do they police those activities on a go-forward basis?” Marchione asked. “The sales manager, the GSM [and] the GM ultimately become the trainers when we leave. … The more training you have at a dealership, the more tenured people you will have, because they feel that their employer is making an investment in their growth and their success.”

Almon agreed, noting that dealers trust proven processes but often lack the tools to reinforce them. By involving managers in sales and F&I training, he said, agents can help them prepare their staff to respond properly to customers’ objections. “You like to hope that, once you train them, well, that’s it; they’re good to go. The reality is, there’s an instantaneous disconnect, usually at the first ‘No’ if they’re in F&I. In the sales process, it’s the customer who says, ‘I don’t have time’ for a test drive or the walkaround … That’s a key component to the big fix.”

Troussov added that service managers should be involved in training as well. Dealers are increasingly dependent upon revenue from fixed operations, and Troussov believes the same disconnect between staff and managers is prevalent in that department as well — and some dealers simply don’t invest in that type of training. “There’s this big gap of actual sales process training. There is definitely an opportunity [for] agents or trainers to step in and be of value to the dealer,” he said.

White recalled a meeting with a dealer and mid-level manager that took place in the week prior to Agent Summit. After deciding on a steps-to-the-sale process, the trio created a self-assessment sheet. “I’ve had a lot of luck with this, because … when they don’t sell a car, too many times, they leave and they don’t learn from it. It allows the salesperson to assess themselves and to take it back to that mid-level manager for a great one-on-one conversation.”

Troussov advised agents to develop recruiting and hiring training for mid-level managers as well as a written “onboarding” process for new hires. “What are we doing to help our dealers change that trend and be more effective in retaining the best talent?” he asked.

Marchione challenged agents to attend training themselves. “Most dealers don’t sign up because the product is better. They’re buying your experience [and] your ability to help grow their business. I would have you all ask yourselves, ‘When was the last time I sat through training? Is there a new slice of bread out there that I haven’t heard of?’ You gotta do your homework to role-play through presentations better than anyone at that store,” he said.

Delivery Systems

King asked the panel to list effective methods for delivering training, listing in-dealership and offsite sessions as examples. Almon said that, no matter the method of reinforcement, “it’s got to start face-to-face and one-on-one.” Marchione stressed the need to teach more than the process and emphasize the psychology behind each step, especially in off-site training, noting that helping students understand why a process works helps the training stick. “If they buy into the ‘Why’ … they’re more likely to go back to the dealership and utilize it.”

“The classroom is important. I think it has to be engaging and it has to be what we call ‘scrimmaging’ rather than role-playing, where people actually practice and work with each other and learn from each other,” Troussov said. “But, ultimately, it’s still that one-on-one involvement and follow-up coaching and training at the dealership.”

White shared a trick for getting managers involved in the reinforcement phase. “We have them write down all their salespeople’s names. I know that seems real simple, but you’ll be surprised. Sometimes those managers will say, ‘What’s that one guy – the goofball – what’s his name?’ It happens. And go a step further. Have them write down personal things they know about that person … Wife’s name, kids’ names, ages, because if they don’t know their people, and can’t understand their people, they can’t motivate those people.” Whether in sales or F&I, he added, training must be ongoing to be effective. “Whether we’re in the stores working with people or in the classrooms or in the online videos, we have to follow up.”

Marchione said he prefers live, offsite events in which trainees are away from the dealership and can absorb the information, role-play and review videos without distractions. “The question then becomes, ‘What type of video training do we use on a daily basis back at the dealership?’ … It can be on-demand-type training and it can be at the dealerships, if you do it weekly or monthly … But really, there’s no medium that you couldn’t use to do training. I think the disconnect is always that there’s no accountability.”

“So if a live event is our preferred method, how can we work video into how we deliver training?” King asked.

“It is very difficult, if not impossible, to keep their attention on the task at hand, which is learning, because there are all kinds of distractions,” Marchione said. “I think that if you’re logistically challenged with dealers agreeing to send their people away — and we recognize that can be a challenge — you want to say, ‘Mr. Dealer or Mrs. Dealer, why don’t you let me take the next day and half and work with so-and-so and so-and-so in a back room somewhere and there will be no distractions whatsoever. They’re mine for the next day and a half.’ … And videotape them while they’re going through each stage in the process.”

Game Film

The conversation then turned to video training and whether dealers should record every actual F&I transaction and archive the recordings. Troussov said he was working as an F&I manager in 2002 when his Minneapolis-based dealer group began recording his meetings with customers.

“I tell you, I fought that tooth and nail,” Troussov said. “Being a finance guy, I don’t want anybody to see what I’m doing, you know, get my magic.” The turning point came, he said, when he realized that the recordings were to his benefit, because customers were unable to claim he or his colleagues had misled them. “During my time with that dealer group, I can tell you that on many occasions, [the recordings] actually saved those dealerships a lot of money.”

Marchione said there is “zero value” to F&I recordings that are archived but not reviewed. “If they’re watching them on a regular basis, both from a compliance standpoint and a skill set-growth standpoint, coaching and counseling, using the videos is a powerful tool.”

“We utilize it specifically as game film,” Almon said. “If you have a dealer group with multiple F&I people, pull everybody together, and then ask for a best and worst video for each finance manager.” He recalled one “best video” in which a customer blanched at a monthly payment inflated by the addition of several F&I products. The finance manager offered to recalculate the payment with an additional $2,500 down, and the customer agreed. “If you’re going to talk development, straight development, in any context — even in your golf game — then videotape is key,” Almon said.

When he worked in retail, White said his employers introduced DMS-integrated video recording, a move that caused dissention in the ranks. “We lost a lot of employees. I mean, people quit. They didn’t want to be videotaped. We stepped back and looked at that and realized those were probably not the people we wanted in that F&I office.”

Ultimately, White said, the risks were outweighed by the benefits, including a pronounced effect on training. Today, White said he reviews videos before visiting clients. He said that it helps him to engage in more effective “target training.” However, he warned, recordings could become a liability for dealers who haven’t invested in a robust compliance program. “If you don’t have those things in place … I would probably tell you not to record.”

Accountability and Desire

Marchione said that when properly utilized, video helps promote accountability among managers and staff. But he reiterated that agents themselves must be accountable as well. They need to know the presentations better than anyone so that when they point out weak spots in the video presentation, they can then turn around and role-play what it should sound like.

White said he is working with a 20-store dealer group that doubled their dollar per copy after sending their F&I team to offsite training and adding cameras. “If sports teams analyze game film to get better, why wouldn’t we want to analyze what we’re doing to get better?” he asked. “If you’ve got good training and you get the guys that buy into it, it’s … helping our dealers be more profitable. And they need those profits nowadays, obviously, more than ever.”

Almon brought up “The Challenger Sale” (Penguin, 2012) by Matthew Dixon and Brent Adamson. Almon said the authors theorized that, after the Great Recession, in business partnerships, “relationship became less important than results.” He said that, in recent years, his company has earned appointments and conquest business because “we could bring the rain. We could make it happen. The overarching theme of training in general, is teaching. And teaching gets people to a level of belief that then creates the next connection to desire.” He asked the agents in the crowd to think about the best finance manager they had ever worked with and ask themselves what set that person apart.

“Some of it is force of personality,” Almon said. “Most of it is tenacity, and really, for all intents and purposes, they’re just not going to be denied. It’s that person that says, ‘Tell me what I can do better.’” He said the economic downturn forced the entire industry to think in terms of dollars and cents and applied that to his initial-training strategy. “I usually start a training class by saying something like this: ‘What kind of guy are you?’ … And they say, ‘What do you mean?’ And I convert that into, ‘Are you a $30 an hour guy? A $40? A $50?’ If you don’t know, $50 an hour is roughly $100,000 a year. ‘Are you a $100 an hour guy, a $200, a $300?’ Think about it in terms of yourselves. Where are you at in relationship to your time? … If you’re not thinking $500 an hour, go rethink it. … I’ve found that it’s the beginning of that thought process that puts people on the path,— and I believe wholeheartedly — of wanting to know how to get better. And without the want-to, the how-to doesn’t matter.”

With time waning, King asked the crowd if they had any questions for the panel. A gentleman in the audience came forward. After commending the panel for a “great job,” he offered his own take on training and accountability.

“You were asking the question earlier about how can we use the technology [in] training the people today. As they mentioned, the weakest link in every dealership is middle management. You send the salespeople to training, they come back, and the first thing the sales manager says is, ‘Man, you don’t need to be doing any of that. Sell some cars.’

“The problem with most managers is, they make it about them, not their salespeople. If you’re going to become a great leader, and a great manager, the first thing you gotta do is make it about their benefit, not yours. Do you all agree with that?” The members of the panel nodded in agreement. “So the way you use the technology, from my experience, sit there with your salespeople … Play that DVD for 10 minutes, stop it, find out what they’ve learned from it, and rehearse and practice, rehearse and practice. Just like the gentleman said, if you’re going to train your salespeople, you’d better be better than any of them. If you’re going to ask them to get uncomfortable in front of the customer, you need to get uncomfortable as a manager. Yet 85% of the managers out there think their job is penciling a car deal. It’s nothing about leadership. So it was a great panel.”

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Challenges and Opportunities

Business is booming, agents are growing their businesses and dealers have never been more dedicated to F&I training, product sales and reinsurance. But change is afoot in the auto finance industry, where leasing, bundled products and high-mileage used cars are growing in prominence. To keep up with these developing trends, new products are being introduced in the F&I office and dealer presentations are changing as well.

To find out how agents are turning the new developments to their advantage, Agent Entrepreneur was at the panel discussion at the Agent Summit 2014 Conference in Las Vegas earlier this year. There, a panel of industry experts looked at what is new in the F&I office and the escalating rewards accompanying the changing marketplace.

Products for Lease Customers

There was a time when few dealers gave lease customers equal time and effort in the F&I office. Today, agents and providers are working together to offer products that benefit customers through the life of the lease as well as at turn-in. According to Jeff Teuscher, vice president of sales for American Auto Guardian Inc. (AAGI) in Arlington Heights, Ill., leasing is running at 28% penetration on a national basis with an average lease term of 36 months. “The average payment is $420 and an excess-wear-and-tear policy adds about $20 a month. We know that there are more than $500 million dollars’ worth of excess wear-and-tear charges assessed on an annual basis, so there is definitely a need.”

Jeff Jagoe, senior vice president of sales and marketing for Austin, Texas-based Innovative Aftermarket Services (IAS), says that with the leasing market at 30-40% — and even as high as 50% in some markets — many agents have been asking for products specifically for lease customers. Jagoe says they want to give lease customers products with immediate benefits — not just benefits at the end of the lease. “What we’ve come up with is dent, windshield repair, cosmetic wheel repair and also rips, tears and burns. These have become very, very beneficial in our industry lately. They are easy products that you can provide to a customer right from the get-go when they have a three-year lease and they can utilize the benefits immediately. That’s emotional. So when they get that dent, or that ding in the windshield, they can have it repaired right away.”

With the vast majority of products sold by dealers offering benefits during the lease, John Braganini, principal of Great Lakes Companies in Kalamazoo, Mich., says, “Many lessors have their own programs for excess wear and tear but the benefits don’t come into play until the end of the lease term. That creates an excellent opportunity for F&I producers.” To fill that gap, as Jagoe mentioned, Braganini says they can offer the customer products with benefits that can be of value immediately, as well as throughout the term of the lease.

Jagoe noted that the programs designed for lease customers are not only beneficial, but are inexpensive to the dealer, agent and consumer. “We’re talking about a $5 or $6 bump in their payment and it’s something the customer can take advantage of throughout the lease.”

“Michigan is a high-penetration area for leases,” added Braganini, speaking of his home state. “They have incentive programs for the factory employees and the dealerships there have always done a good job of selling leases. …We started selling lease-protection products years ago. Paint and fabric, windshield, dent and key – all the short-term products.”

Some challenges remain, however, for dealers who wish to capitalize on leases, according to Teuscher. If the dealer only expects a reserve of $500 per lease deal, he says many F&I managers will assume that the $1,200 benchmark is out of reach. The key, he pointed out, is to endeavor to sell products that cover both ends of the deal and resist the urge toward gigantic mark-ups.

At National Automotive Experts (NAE) in Strongsville, Ohio, company president Kelly Price says they look at things a bit differently. “We focus a little bit more on making sure the customer maintains their vehicle at the facility, because if they’re not maintaining with them, only 14% of those people are going to come back and buy from them again.” Setting up a prepaid maintenance program, either as an incentive to purchase or lease from the dealer, or by offering it for sale in the F&I office, allows the agent to customize for each individual dealership. “Whatever their needs are, whether they want the customer back once a year or three times a year, we can set that up for them. But, most importantly, it’s keeping that customer coming back to the selling dealer. They need to keep that customer back in the store, so that they don’t have to work as hard to get that next sale.”

Bundled Products

With bundled products growing dramatically for the past few years, Teuscher says AAGI came out with a vehicle shield product that they thought would “fit all needs” but quickly found out that it didn’t. Instead, variations of it were being requested across the board. “One of the primary appeals of bundled products is that you can customize the products for the F&I manager and their customers to realize a mass appeal of the overall product.”

Bundled products also offer “extensive coverage with very competitive pricing,” according to Teuscher. He likened them to a State Farm policy and suggested presenting bundled products to the customer using that analogy. “You can buy home and auto insurance and receive a discount. Or, you can get home, auto and life and receive the maximum discount.”

“Bundled products offer a built-in advantage for agents when the first thing the F&I manager says to the agent is, ‘Hey, I’ve got too many products already,’” says Rick Meinke, national sales manager for Woodridge, Ill.-based Entire Car Protection (ECP). “What’s nice about a bundled product is now they’ve got three, maybe four products to sell.” Meinke says ECP has bundled up to eight products, which makes it easier to offer to customers.

(ECP was misquoted in this article published on Monday June 2nd 2014. ECP, Inc. does not offer Vehicle Service Contracts or GAP.)

For agents who fear losing separate commissions on bundled products, Price says her company offers an alternative. She advises them to bundle the presentation instead. “And then if the customer says, ‘I’m not interested in dent, but I like the windshield,’ that’s great, we can customize it for them. They don’t know how many contracts would be printed out on the back end, [either with or without one of the products in the bundle.]”

Despite their apparent popularity, bundled products still represent only a fraction of total products sold. Jagoe says for this to change, dealers have to petition banks and finance companies to get on board. “We need to fight with these lenders and let them know, ‘Hey, you have a bundled program – you’re financing yours, you’re not financing ours. That’s wrong.’… We really gotta get the dealers to start harping on the lenders and say, ‘Listen, you need to start financing this program.’”

Products for Used-Car Buyers

Braganini says selling F&I products to used-car customers can bring added challenges. “One of the issues you have is that service agreements are expensive and it’s difficult to get them financed. You sell a limited-coverage contract with reduced benefits to get the cost down and you don’t mark them up as much. But the percentage of high-mileage used cars in relationship to sales in general just keeps going up. The vehicles are just made better, and young people can’t afford to buy new cars today.” However, he adds, dealers who ignore the growing used-car market do so at their own peril.

“I’m not big into used cars, never have been,” commented Randy Crisorio, president and CEO of United Development Systems (UDS) in Clearwater, Fla., “But there are some tremendous opportunities out there for dealers that are used-car dealers only that sell 60, 80, 100 cars a month who do a good job, have been there a long time, and have F&I staff.”

Traditionally, those opportunities have come in the form of a service contract, but Price believes dealers should widen their focus to protection products as well as prepaid maintenance. Price believes that, if customers can view the results of a protection product that significantly improves a vehicle’s appearance, they will be more likely to add it to their used-vehicle purchase. In a sense, by letting customers see the results, the product could sell itself. Price does not think enough is being done to help dealers market those paint protection products. “If you have a good paint product that really makes that car look like it’s been reconditioned, and it shines, then put that pre-owned unit on the showroom floor. … Let them see what it does.”

When a customer shows up in a franchised dealer lot, they are not expecting to find 100,000 mile-plus vehicles, says Glander. Agents should remind their dealers of this. “The dealer has to give the customer confidence to buy that vehicle. Putting a service contract on the vehicle turns shoppers into buyers. We like that idea a lot and it helps agents, obviously, to make a nice commission.”

Glander adds that, in addition to improved CSI numbers, dealers can leverage used-car product sales to increase back-end profits. “Service contracts remain the highest-margin item in the F&I shop. But, more importantly, on the back end, a lot of dealers have very profitable, very sound reinsurance pools. Putting 120,000- to 150,000-mile vehicles that have very different repair patterns may or may not make sense to add to that reinsurance pool. I think it’s important to help the dealers understand there’s still an underwriting profit opportunity there, depending on the vendor they use and likewise for agents.”

The Value of Training

“Ongoing training is important,” stated Meinke. Agents must be willing to adjust their training, in order to change dealers’ mentality toward used-car buyers. Self-imposed limitations, such as failing to present products for high-mileage vehicles, can be a real barrier to production. “Beat these limitations and try to get the F&I managers to understand that, by not offering these products on used cars, they are creating a limitation for themselves.”

Teuscher agrees, saying agents and dealers both must shake off the mindset that F&I products and high-mileage vehicles don’t mix — and that high-mileage vehicles are not saleable customers. “The whole process of eliminating zeroes is the key,” he says. “Sell a windshield protection, sell a six-year powertrain coverage, sell an etch product. Why aren’t we selling more etch on high-mileage used cars? It’s a tremendous benefit with a relatively low cost to the dealer and a nice margin for the agent and the F&I department.”

Ultimately, Teuscher says, agents will have to take the lead to effect an industry-wide change. “It’s the mindset, again, of the dealer principal and the agent servicing that account. Why do we have a dealer on one side of town running at 80% etch penetration and the same franchise across town running at 15% or less? It’s how we’re installing the product in the dealership and the training that we’re providing to hit those numbers. Develop a marketing approach with the materials themselves and then really have the passion to follow through and make it happen at the individual dealership level.”

With more products designed specifically for the rapidly growing lease and used-vehicle segments, new income opportunities are clearly on the rise. While they may require agents and dealers to reevaluate the way they look at sales opportunities in the F&I office, it seems that the industry consensus is that there is money to be made and this segment of the market will continue to experience growth. When unsure what approach might work best in this changing market, consider a word of good advice from Meinke: To be successful, “Treat them like a new-car customer.”

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