Pub. 14 2015-2016 Issue 2

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 3 , 2 0 1 5 10 new jersey auto retailer Building the Perfect F&I Department BY JUDY VANN KARSTADT W hen I was promoted to F&I manager in 1980, my general manager showed me to my office, pointed to the computer and all of the forms, gave me a list of products to sell, and said, “Go to work.” Does this sound familiar? I was fortunate enough to have a great office manager who was relentless with paperwork. I learned very early on about Contracts-In-Transit, how to read a Reserve Statement, and how important the relationship with the lender was to the entire process. One thing I can say is, the basic fundamentals of building an F&I department is basically the same 35 years later, but the number of choices in each category has increased dramatically. In building the perfect F&I department, I would address six primary areas. You need theRight Person, theRight Products/Service Provider, the Right Lenders, the Right Pay Plan, the Right Technology, and the Right Training. The Right Person I frequently get calls from dealers asking me if I know of any great F&I managers. What constitutes a “Great F&I manager”? When I was an insurance specialist, I traveled the country to help failing F&I departments become profit centers. One lesson I learned was F&I must conform to the selling style of the dealership. The right person will work with the sales managers, sales people, and accounting office to assure the customer is delivered timely, profitably, and profession- ally compliant. Everyone wants the F&I person that will produce $1000-$1500 per vehicle, but hiring this individual without dissecting how those numbers are generated may not always be beneficial to your dealer- ship. It is important that thepersonalityof the individual fits the dealership’s demographics and works well with the culture of the store. Promoting from within the dealership has proven to be a solution for having someone whounderstands thedealership environment andhas grownwith the store. I havemet some very talented finance managers who came from the accounting office or service depart- ment. Utilizing this platform can take time and discipline, to cultivate loyal employees. The Right Products/ Service Provider What elements should a dealership look for when choosing a Service Provider? Check with the state in which the dealership is located to see which F&I products are regu- lated. Some states regulate products such as Guaranteed Auto Protection (GAP), Ex- tended Service Contracts, and Vehicle Etch Theft Protection. Does the provider have a strong administrator, insurance company, and claims processing center? I will never forget being a fairly new F&I director, when the dealer asked me to get on a plane to Cali- fornia to visit the Extended Service Contract Provider who was not paying our claims. Needless to say, that provider is no longer in business. Does the service provider have a good representative in the dealership’s mar- ket? “I don’t know my product representa- tive” or “I have not seenmy representative in months”, is not a “partner” who will benefit your dealership. The Right Lenders Many dealerships rely on their captive lender or the lender that holds the dealership’s floor plan as their primary lender. Take a look at the number of lenders in your system. The number of contracts the dealership provides to the lender compared to the number of con- tracts submitted to that lender, is important in maintaining a good relationship with a lender. You may notice that there is a trend of new dealer participation programs on the market based on the Consumer Financial ProtectionBureau (CFPB’s) continuedefforts to limit dealer participation. Thedealer agree- ments should be reviewed and updated peri- odically. RegulationZrequires thedisclosure of negative equityand states, “the sellingprice of the vehicle may not be increased to cover negative equity”. Check your contracts to see if you are properly disclosing negative