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State of the F&I Union

A survey of 159 F&I professionals revealed a number of surprises — and confirmed at least one widely held theory — about compensation and how they feel about their work.

February 2017, F&I and Showroom - Feature

by Ryan Fischer

Around this time every year, the president of the United States delivers the “State of the Union,” a speech that addresses the overall condition of the country and the chief executive’s plans for the year ahead. For 2016, I decided to take inventory of the F&I landscape. Where is F&I heading? How are our fellow finance professional feeling about the future of F&I? How is performance and income shaping up across the nation?

With these questions in mind, I initiated a nationwide survey of finance managers and directors. The survey was completed online using software that assigns a unique ID number to each anonymized IP address. Results were tallied for the nation and by geographic region. The survey included 135 finance managers and 24 finance directors representing every region in the United States. The four most represented regions were East North Central (26%), South Atlantic (19%), Mid-Atlantic (17%), and West North Central (12%). The remaining regions fell under 10% of those surveyed.

1. How Do You Like Your Job?
To gain an early understanding of how F&I professionals felt about their work, we posed the following question: “With one star being ‘I hate my job’ and five stars being ‘There is nothing else I would rather do,’ how do you feel about being an F&I manager?”

The average among finance managers and directors was four stars, with 37% of respondents voting four stars and only 4% choosing one star. Segmented out, the results indicate that directors are slightly happier with their jobs than managers. Finance managers gave an average rating of 3.9 stars and finance directors gave a slightly higher rating of 4.25 stars.

2. How Much Do You Make?

Annual Income: Finance Managers
Annual Income: Finance Managers

Annual income was spread out consistently throughout the country. For finance managers, 41% of those surveyed reported an income between $75,000 and $110,000. Fifty-four percent earned more than $100,000 per year and 19% earned more than $151,000. Only 17% of those surveyed earned less than $75,000 annually.

Annual Income: F&I Directors
Annual Income: F&I Directors

Finance directors, on the other hand, skewed heavily toward larger incomes. Fifty-eight percent of directors earned more than $151,000 per year, compared to only 19% for finance managers. Ninety-two percent earned more than $100,000 and 79% earned at least $120,000 annually. Only 8% of directors surveyed earned less than $100,000.

3. What’s Your PVR?

Average PVR: Finance Managers
Average PVR: Finance Managers

As expected, due to the large salary discrepancy, directors reported a higher profit per vehicle retailed (PVR) than of finance managers. More than one-third (37.5%) of directors surveyed reported a per-copy average of more than $1,600, and 83.5% were higher than $1,250. In comparison, only 13% of finance managers reported a PVR of more than $1,600, with 57% coming in between $950 and $1,400 per deal. Fewer than 1% were below $600 PVR.

Average PVR: F&I Directors
Average PVR: F&I Directors

When we examined PVR by region, we found large discrepancies, further validating the theory among F&I professionals that it is difficult to compare your results with peers working in other parts of the country.

For example, more than half (53%) of those surveyed in the West North Central region had a PVR between $600 and $1,100. There were no managers or directors in the Mountain region with less than $1,100 PVR. That’s quite the swing between areas. Some regions, such as East South Central, showed a majority of finance managers all falling into the same bracket, with 64% of finance managers averaging between $950 and $1,100.

Others, like those working in the Mid-Atlantic region, had a very even number set across the board, with no PVR bracket representing more than 28% of the total and the remaining brackets only accounting for 12% to 20%. This was also evident in the Pacific region, with all brackets falling between 12% and 25%. The East North Central region had two strong categories, with 44% of those surveyed averaging between $801 and $1,100 and 34% averaging $1,250 to $1,400.

4. How Do You Feel?
When it came to long-term job prospects, finance directors were generally positive. More than half (54%) of directors surveyed felt the finance department will always be a focal point of the dealership. Seventeen percent felt they are slowly being pushed out of the dealership, and 29% were unsure. Finance managers held a similar sentiment. Fifty-eight percent of managers felt that the finance department will always be a focal point of the dealership, and 21% felt that they are slowly being pushed out of the dealership, Twenty-one percent were unsure.

We also found that finance managers who worked less hours indicated they were happier overall. Using the same five-star scale from the first question, those working more than 50 hours per week reported an average job rating of 3.8 stars. Those working fewer than 50 hours per week had an average job rating of 4.1.

Interestingly, although managers appear to be happier working fewer hours, finance directors indicated the same levels of happiness regardless of hours worked. Those working more than 50 hours per week reported a job happiness rating of 4.2 stars, and those working fewer than 50 hours reported a happiness of 4.3.

5. Are the Long Hours Paying Off?

The trade-off in job happiness came with a slightly higher probability of ­income generated by longer hours. Fifty-five percent of finance managers who work more than 50 hours per week earn more than $100,000 per year and 20% earn more than $151,000 ­annually. Of those who work fewer than 50 hours per week, 52% earn more than $100,000 annually and 17% earn more than $150,000 per year.

Among finance directors, the income gap between hours worked was more significant. Ninety-four percent of finance directors who work more than 50 hours per week earn $100,000 or more annually, and 53% earn more than $151,000. Of those who work less than 50 hours per week, only 43% earn more than $100,000 annually and 29% earn more than $151,000 ­annually.

The main takeaway of the State of the F&I Union is that most finance managers and directors are happy with their work and have a healthy outlook of the future. We found further proof that it is not productive to compare PVR across different regions but that, overall, income and PVR is stable across the country.

I hope these numbers help all F&I personnel to gain a better understanding of the business we are in. Until next year, good luck!

Ryan Fischer is the store manager at Rochester, N.Y.-based Dorschel Automotive Group. Email him at [email protected]

Comment

  1. 1. Mark Virag [ February 14, 2017 @ 10:15AM ]

    Great survey! Do you have the overall distribution of PVR combining Directors and Managers? How about product index?

  2. 2. Capt Jack [ February 21, 2017 @ 01:08PM ]

    Enjoyed the topic. Turnover should not always be credited for long hours and low income. Many highly compensated producers have left opportunity for other reasons.

    Next time look at product profit(PPRU) contribution to PVR. With declining lender reserves, it would be interesting to see what the mix is in each of these Regions.

    Lastly, the driver for higher PPRU is PPD (products per delivery). Is F&I Manager income tied to PVR or PPD ?

  3. 3. Don Rice- "Your Friend in [ February 22, 2017 @ 10:12AM ]

    Why did you not ask about dealer charge backs, which if heavy handed by management chops the F&I people badly. Ask how long their dealer charges back payoffs, warranty, etc from each deal and what % they take from Finance peoples pay checks.
    what % do the dealer pay their F&I people per deal, and how do they divide the % into the number of F&I employees. The charge backs are one of the most important parts of the pay plan. The amount and the amount of time extended. Although these chargebacks are not the fault of an F&I employee, the dealer acts as if that is the case. Warranties ditto. Ask the people you interviewed how they feel about the compensation plan in regard to these questions and only then do you have an accurate answer.

  4. 4. Ryan Fischer [ February 24, 2017 @ 01:26PM ]

    @Capt Jack and @Don Rice - Great suggestions. Being that this was the first year this was done, the questions were limited. Your suggestions for additional questions are great and will help us bolster our understanding of the F&I landscape when we include them next year!

 

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