Dealership F&I managers see themselves as putting automotive customers’ needs first, as they’re constantly seeking low interest car loans for customers. But unfortunately, customers don’t always see it this way. According to a recent survey asking automotive customers, “Which dealership employee do you feel is most interested in serving your interests, rather than the interests of the dealership?,” only 5% of respondents indicated F&I managers, with most (73%) indicating salespeople. Kia dealers scored the highest, with 8.2% of customers indicating F&I managers put customer interests first.
Part of the reason customers might not see the value F&I managers provide is that that F&I managers interact with the customer close to the end of the buying process, so they don’t have time to learn the customer needs, possibly coming off as trying to sell something for the benefit of the dealership. Push back from customers, coupled with F&I managers’ need to juggle several high-stress responsibilities and long hours is leading to high turnover among these roles, with 38% of F&I managers leaving their roles in 2015.
Evolving F&I Manager Responsibilities
Increase F&I Department Income
As consumers increasingly walk into dealerships armed with extensive information about makes, models and competitive pricing, this leaves dealership sales teams much less room for negotiation, and results in smaller profit margins. Due to more aggressive pricing, the next best way for dealerships to make a profit is through F&I, which puts pressure on managers to sell financing, insurance and other added services. In some cases, sales consultants have started to take on financing, so F&I managers must make a profit through add-on products, which can be stressful to the F&I managers and intrusive to the customer experience.
Boost Customer Satisfaction
F&I managers must put the customers’ needs first and determine a financing option that works for them. In the absence of a positive customer experience, the buyer might instead opt to finance through his or her bank, and decline extended warranty or other servicing programs offered by the F&I team. Encouraging consumer financing through the dealership is key, as it creates closer ties between the customer and the dealership: Customers who finance at the dealership are more likely to purchase from the organization again as opposed to to those who handle the balance on their own, leading to more long-term repeat buyers.
Maintain Compliance
In addition to bringing in more money for dealerships and creating a positive customer experience, F&I managers also face constant stress to keep customers’ deal structures transparent. Regulators such as the Federal Trade Commission, Consumer Financial Protection Bureau and state attorneys general keep dealerships’ F&I practices under heavy scrutiny. Some dealerships have even gone so far as to hire compliance officers to review every loan and agreement deal.
Adjusting Compensation and Workload
F&I managers often feel overworked and face burn out due to juggling the responsibilities above, leading to high turnover rates. But at least one dealership has put a solution in place to combat turnover by, surprisingly, decreasing compensation.
Southwest Kia in Mesquite, Texas switched from an all-commission pay plan for finance managers to salary plus bonuses. This is similar to the salary plus bonus plan many dealerships are implementing for sales roles. Finance managers now typically make $7,000 to $8,000 a month instead of the $12,000 or $13,000 a month previously paid in those positions. But they now get more time off, and productivity has increased as a result of a better work-life balance. Dealers implementing new pay structures can see the benefits of a more engaged workforce while actually decreasing their variable costs – a huge win as margins tighten and the competition for finding great talent increases.
Rather than working 80 hours a week, F&I managers at Southwest Kia now work an average of 40-45 hours per week. While Southwest Kia has seen some turnover from the compensation plan switch, they have seized it as an opportunity to promote top employees from the sales floor. In many cases, the employees are recent college graduates who are motivated to succeed and don’t expect the compensation the dealership used to pay.
F&I managers are a critical role at automotive dealerships. While sales staff can make the official sale, many customers wouldn’t be able to drive off the lot without the financing provided by F&I managers. By adjusting pay plans, reducing hours and facilitating a lower stress environment, dealerships can increase F&I manager employee satisfaction and retention rates.
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