“It’s a tough job,” Angus said, noting the long hours that F&I managers put in and the complex knowledge of the lending market needed to be effective, “and the money makes up for it.”
Some of the alternative pay plans he has seen include:
*Combining lower pay with shorter hours for F&I managers. The main advantage was happier F&I staff members, with less stress and more time with their families. But the change also meant some of the top performers left for higher pay elsewhere, leading to higher training costs for staffers who were promoted into the vacated spots, as well as reduced profits for at least a short time due to the loss of those high performers.
*Sharing a set percentage of total gross or net profit among all employees. A dealer can combine front- and back-end profit on sales into a kitty that’s divided among all employees who contributed to the sales. The pros are supposedly enhanced teamwork and a fixed percentage of profits going to compensation, which makes the dealer’s financial planning easier. But the change may undermine motivation, as the sales consultants see less need to try to eke out a front-end gross.
*Tweaks to F&I and sales pay plans. For example, some dealerships’ F&I managers now earn twice as much for selling products as they do on dealer reserve, with bonuses for higher penetration rates. Or the dealership may have switched to flat rates; one example cited gave the dealership flat rates of 1 percent on new-vehicle financing and 2 percent on used-vehicle financing.
In addition, those stores’ salespeople may be on a reduced, flat commission on all units sold, regardless of price.
*Hybrid plans that eliminate all purely F&I positions. Pros: Sales personnel can make more, and the dealer’s overall compensation costs go down.
Cons include increased risks of running afoul of compliance rules, and the inevitable loss of some F&I income because sales personnel aren’t as well trained on selling F&I products. Offsetting the latter requires additional, ongoing training, which also costs.
Angus also argued that claims of enhanced customer satisfaction scores are bogus. “For the first six months or so” after a hybrid staffing solution is installed, he said, “everyone’s happy, but then the numbers start to deteriorate.”
Angus’ conclusion: "F&I is going to be the backbone of the dealership’s profit, and some of it’s going to have to be shared -- but without reducing the F&I manager’s pay."