What Does It Mean To Be A Finance & Insurance Manager? At the completion of a sale, a Finance & Insurance (F&I) Manager arranges financing and leases and provides customers with valuable insurance offerings, warranties, and aftermarket items.
What does someone in finance and insurance do?
A finance and insurance manager is a specialist who is in charge of marketing financing and insurance products to new and used car purchasers. Customers must be given a detailed explanation of aftermarket items and extended warranties, as well as a complete explanation of manufacturer and dealership servicing procedures and policies, by finance and insurance managers. To acquire competitive interest rates and financing programs, they must seek out new lending institutions and maintain positive relationships with them. Finance and insurance managers should also provide training and information on finance and lease programs to the sales force.
How do F&I managers get paid?
Naturally, depending on the size of the dealership, this percentage can vary significantly. A large, high-volume dealership with several managers will often pay out a lesser commission proportion of F&I revenue. A small dealership, on the other hand, may be required to pay a higher percentage, particularly if the F&I manager has other obligations.
An F&I manager’s salary should be based primarily on the amount of revenue he or she earns, regardless of the size of the dealership. The percentage of compensation should always increase or decrease in accordance with performance, and today, customer satisfaction with the F&I process must be included in that performance. This gain or decrease can be based on the F&I manager’s penetration percentages, income per retail unit, or the total amount of F&I income generated.
When calculating total dollars in F&I revenue, a dealer must first decide how much weight to give to financing reserve and whether to compensate on gross or net income after chargebacks. F&I managers frequently have little to no control over finance reserve income due to subsidized rates by the manufacturer on new vehicles and interest rates and monthly payments given by the desk as part of the sale.
Because finance reserve is 100 percent profit, a F&I manager should make every effort to generate reserve revenue. However, because financial reserve provides no value to the client, it is vital that the markup be constant and not exorbitant. Excessive finance reserves result in excessive chargebacks, which diminish net income and have a negative impact on CSI. Excessive financing reserve can also put a dealer at risk of legal action, especially if it occurs frequently among a certain race or cultural group.
Finance reserve continues to decline in most dealerships, accounting for less than 40% of F&I revenue. Furthermore, because the sales department frequently quotes the monthly payment and interest rate during the sales process in order to sell the vehicle, any finance reserve income has been produced by the sales department, not the F&I department or the F&I manager.
Separating reserve revenue from other income and paying a reduced or limited commission on reserve income is one technique to ensure a F&I manager increases product sales rather than just marking up the rate. This focuses attention on the sources of income that the F&I management does have control over, such as F&I product sales, while preserving an incentive to generate (or retain) as much reserve income as feasible.
Some dealers still use a basic pay structure that focuses solely on total F&I income rather than F&I income per retail unit, or a pay structure that adjusts compensation based on penetration percentages. The F&I manager is simply paid a certain percentage of F&I revenue, say 15%. The F&I manager receives $9,000 if the department makes $60,000. While it’s straightforward and straightforward, it doesn’t provide much of a carrot for the F&I manager. Plus, with this type of pay scheme, even the weakest F&I manager can make significant money when car sales are rising. When the dealership sells enough units, poor performance is rewarded, whereas great performance is penalized when sales are low.
Many dealerships use a graded pay system based on overall revenue or F&I revenue per retail unit. This type of pay plan can help motivate a F&I manager by increasing performance. F&I income per retail unit tier levels and commission percentages vary depending on the size of the dealership, whether or not a finance reserve is included, and whether or not F&I income is gross or net.
The issue with this pay plan is that it still places a premium on dollars. With a remuneration structure like this, F&I executives will be tempted to focus on one area at the detriment of all others. “Where can I make the greatest money in the shortest amount of time?”
Every good F&I manager understands how to manage his or her compensation plan. This type of pay scheme is doomed if there aren’t any constraints in place. With $2,000 VIN etch policies, $2,500 car alarms, and chargebacks off the charts, dealers quickly discover they have a large share of F&I income from financing reserve. This type of payment scheme also goes against the fundamental point of using a menu, which is to present every product to every consumer at all times. You should sell things based on the demands of the customer, not on your profit margin.
The easiest way to measure (and recompense) a F&I manager’s performance is to use penetration percentages. That’s why, in baseball, a batter’s batting average, not the total amount of hits, is used to evaluate him. If you have 300 at bats, 100 hits is a fantastic performance. If you have 1,000 at bats, it’s a bad job.
The success of a menu-based approach in F&I hinges on varying the pay proportion based on product penetration percentages.
The emphasis can still be on gross profit by incorporating penetration percentages in the F&I pay plan and then altering the proportion of manager commission according to those percentages, but a F&I manager is compelled to concentrate on all goods to obtain the maximum commission. An F&I manager who makes all of his money from finance reserves rather than product sales, for example, will not receive nearly as much commission because he is not making nearly as much money from product sales. This manager earns the majority of his money in finance reserves, and his composite index reflects his low product sales performance. His remuneration should reflect his bad performance as well.
In a dealership with more than one F&I manager, departmental compensation should be included in addition to individual compensation. Paying a modest percentage of the department’s revenues guarantees that all managers are concerned about the team’s success, not just their own.
If there is a F&I director, or if one manager is named as the F&I director, “As a “lead” manager, her share of departmental income can be adjusted to account for her added responsibilities and tasks. While each individual manager must be compensated primarily on the basis of his or her contribution to overall department revenue, paying a commission on total department revenue maintains all F&I managers functioning as a team. When another manager gets a good deal, paying a tiny percentage of departmental income can promote excitement (not just envy).
Since most manufacturers now include customer happiness with the F&I process in their CSI surveys, customer satisfaction with the F&I process is another crucial area that every dealer must include in his compensation plan today. Consumer satisfaction with the F&I process should be rewarded, while customer satisfaction with the process should be penalized. The CSI score of the F&I manager can be used to ensure that every customer has a positive experience in the F&I office.
Again, percentages will vary depending on the dealership’s size, whether reserve revenue is included, and the quantity of products sold at the F&I office.
Reahard & Associates Inc.’s president is Ron Reahard. For dealerships across the United States and Canada, Reahard & Associates offers tailored in-dealership F&I training. Contact Ron at (866) REAHARD or e-mail him at if you’d like a copy of the F&I Pay Plan Worksheet seen in the illustration (available in Microsoft Excel).
Is F&I manager a good job?
With yearly wage increases of three to five percent, F&I Managers are among the highest paid car dealership personnel.
An F&I Manager’s pay is typically four times (4x) the average salary in the United States and three times the median household income.
Because of the unusual skillset required to become a F&I Manager, automotive finance managers are well compensated. An F&I Manager’s responsibilities include patience, the capacity to work long hours, and the ability to deal with lenders and consumers on a daily basis.
F&I Managers are also in charge of ensuring that the car dealership is protected from legal and paperwork liabilities.
What function does a finance manager perform?
Financial managers prepare financial reports, direct investment activities, and formulate strategies for their company’s long-term financial goals.
Work Environment
Banks, investment businesses, and insurance companies are just a few of the industries where financial managers work. The majority of financial managers work full-time, with some exceeding 40 hours a week.
How to Become a Financial Manager
A bachelor’s degree and 5 years or more of experience in another commercial or financial occupation, such as accountant, securities sales agent, or financial analyst, are often required of financial managers.
Job Outlook
Employment
The number of financial managers is expected to rise.
From 2020 to 2030, the growth rate for all vocations will be 17 percent, which is substantially faster than the norm.
Over the next ten years, an average of 64,200 job vacancies for finance managers are expected.
Many of those positions are likely to arise as a result of the need to replace people who change occupations or leave the workforce for other reasons, such as retirement.
More Information, Including Links to O*NET
Additional resources, such as O*NET, a database of key characteristics of employees and occupations, might help you learn more about financial managers.
What do finance managers make at dealerships?
Dealership Finance Manager salaries in the United States range from $21,346 to $572,331 per year, with a median of $102,812 per year. Dealership Finance Managers make between $102,813 and $258,267 per year, with the top 86 percent earning $572,331.
Who makes the most money at a car dealership?
Achieving the position of highest-paid auto salesman does not happen overnight; it is part of a salesman’s everyday routine. While it may take years for some to break the record, just a few people have been able to do so in a year.
For a long time, Joe Girard held the record for selling the most cars in a year, with 1,425 in 1973. This one act earned him the title of “King of Sales.”
However, today’s record belongs to an extraordinary human. With 1,582 cars sold at the Les Stanford Chevrolet dealership, Ali Reda is the world’s highest-paid car salesman.
How much do F&I make?
A f&i manager’s average annual compensation in the United States is $104,891. There were 474 salaries reported as of January 20, 2022. Is this of any use?
Is being a finance manager hard?
If a corporation fails to reach its financial objectives, the finance manager will be held responsible. It’s also a demanding job with many responsibilities, and finance managers must adhere to a number of tight standards.