Rising disparities in pay between the finance and insurance (F&I) and sales departments are leading to morale problems and high turnover at dealerships, according to an F&I authority who spoke a conference held in Las Vegas.
“Dealerships are testing a number of alternative pay plans, but nothing proposed so far appears to solve the problem,” George Angus, president of Team One Research and Training, told the Industry Summit, an annual F&I conference.
“Don’t wait until your house is on fire before you address this thing,” Angus told his audience, composed largely of F&I product vendors, trainers and dealership personnel.
Angus said the pay gap concerns him because “this leads dealers to thinking they can eliminate the F&I manager,” for example through so-called hybrid systems in which sales personnel handle all F&I duties.
Hybrid staffing arrangements were one of several responses to the growing pay gap that Angus discussed, all of which came with pros and cons.
More than GMs
Angus – a leading trainer and speaker who has worked with thousands of F&I professionals, product providers and manufacturers, and reaches nearly 10,000 subscribers via his ‘Saturday Morning Messages to F&I Masters, series – cited data from the National Automobile Dealers Association (NADA) and from his company’s research that showed the extent of the widening pay gap.
He attributed the gap in large part to shrinking margins on new-vehicle sales due to more competitive pricing in the internet era.
NADA’s 2013 Dealership Workforce Study showed the national average pay for F&I managers was US$128,434 (A$140,167), vs. $122,549 (A$133,754) for sales managers and $63,799 (A$69,635) for sales consultants.
Over the past three months, Team One looked into compensation at what it considers the top 150 dealerships in F&I performance in terms of profits, sales-satisfaction scores and other criteria. It found the gap to be even larger.
According to Angus, the average annual pay at those dealerships was:
- F&I managers: $206,600
- Sales managers: $136,300
- Sales consultants: $65,000
- General managers: $228,500
In some cases, he said, F&I managers were taking home more than dealership general managers.
Turnover
Those disparities, Angus says, are part of the reason NADA found that one in four new hires at dealerships leave within the first year and six in 10 sales consultants leave every year. Among so-called Gen Y employees – those born roughly between 1975 and 1995 – it’s even more dramatic, with 54% of Gen Y new hires in sales leaving within 90 days.
Team One interviewed dealership personnel about sales and F&I department pay plans. “You can’t believe how passionate the comments we got were,” Angus says.
Sales consultants fumed about spending days turning a lead into a new-car sale, only to see no more than a “$100 mini” on the deal while, they said, the F&I manager pulled down more than $10000 for 30 minutes spent on a deal that wouldn’t have happened without the sale.
But F&I managers defended their pay in their comments, noting that they bring in the lion’s share of a dealership’s profits while protecting it from running afoul of regulators.
“It’s a tough job,” Angus says, 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.”
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