The nation’s F&I managers and directors have maintained their support of dealership sales, even in a chaotic market with soaring inflation and interest rates, and parts a inventory shortages, found the Finance Manager Training’s 2023 Survey of Finance & Insurance managers and directors.
The sixth annual survey asked F&I managers across the U.S. to rate their incomes, PVR, job satisfaction, hours worked, locations, and future outlook for the auto retail industry. Their responses revealed a significant increase in F&I manager income year-over-year, and varying levels of job satisfaction and optimism for the future.
The survey uncovered that incomes are increasing for F&I managers. In fact, 63% reported earning over $150,000 in 2022, compared to 56% meeting that threshold in 2021. The seven percentage-point increase puts most F&I managers in the top 10% of earners in the nation, according to the report.
Those reporting incomes over $100,000 also grew, the report found. In fact, 84% of respondents reported earning a six-figure salary, compared to 81% in 2021.
Other income highlights include:
• 27% of upper-income respondents earn $250,000-plus a year.
• 15% of F&I managers earn less than $100,000.
The survey found that most F&I professionals have a high school diploma or no diploma. Just 29% have a bachelor’s degree or higher, making F&I a field with high earning potential without advanced education.
“This profession requires no degree,” says Ryan Daniel, CEO of Finance Manager Training, a leading U.S. F&I school. “According to U.S. News & World Report, the average physician salary in the U.S. in 2021 was $208,000. F&I managers are making what a physician makes without needing eight to 12 years of schooling.”
Pay Plans Stay the Same
The income increases were also without pay plan changes, according to Daniel. Most F&I managers reported being paid a percentage of the back end and nothing more, a standard for F&I pay plans. Also, many dealers still pay a salary and provide a demo car, with 20% of respondents reporting those pay plans. “Pay plans are staying the same,” he says. “What is happening is F&I managers and directors are putting up better numbers.”
He explains that in 2017 just 20% of finance managers reported a PVR of more than $1,400 and 57% put their PVR between $950 and $1,400 per deal. In 2021, a major shift occurred, with 62% of finance managers reporting a PVR of over $1,500 and 91% reporting a PVR of at least $1,100 per deal.
“But in 2022, those numbers skyrocketed,” Daniel reports. Now 74.3% of F&I managers report a PVR of greater than $1,501, and 65.9% report a PVR greater than $1,701. More people are getting more per deal, which is driving their salaries and earnings higher. What is happening is F&I managers are getting better at what they do.”
The income increases also were possible without spending more hours on the job, the survey found. Over 50% of those surveyed reported working 50 or fewer hours per week. Just 27.6 reported working over 56 hours a week.
Daniel suggests better training and greater training investments are the main reasons for PVR and income growth. However, he also notes high demand amid limited inventories also plays a role. “Dealerships have the upper hand,” he says. “Customers are going into deals understanding that they need to play ball a little bit.”
Media reports suggest there’s also been an increase in people struggling to afford their car payments because of car repairs. Daniel maintains that trend could also increase demand for F&I products.
“Cars are more expensive, so people are taking out longer loans,” he says. “People see that if they want to keep their vehicles for the full seven, eight or even 10 years, they will benefit from a vehicle service contract. It’s easier to pay $375 a month versus $350 for seven years than it is to produce $3,000 for a repair bill all at once.”
He adds that the pandemic was a real wake-up call for many consumers. “People realized they need to be prepared for the future instead of winging it when things come up,” he says.
Regional Pay Differences?
Survey results make it appear that it’s more lucrative to be an F&I manager in certain regions of the country. On its face, it seems F&I managers in the South earn more than their counterparts in other areas of the country.
But Daniel suggests that trend reflects the survey gathering more responses from F&I managers in the South.
In the survey, 35% of respondents were from the South, 23% from the Midwest, 22% in the North and 20% in the West. “When we account for the regional population differences, income levels remain fairly consistent from one region to another,” he says.
Daniel notes that plans are to ask a few more questions next year to dig into whether certain regions are really more lucrative in terms of salaries.
Greater Appreciation From the Top
The survey also assessed whether F&I professionals feel appreciated at their dealerships. The answer was a resounding “yes,” with 67% of F&I directors reporting they feel appreciated by the dealership management and ownership. Among F&I employees, 61% reported feeling appreciated.
In contrast, in 2021, only 46% of F&I directors felt appreciated by their respective management and ownership. “That’s a remarkable 21 percentage-point increase,” says Daniel.
The research discovered that as income levels rise, so does appreciation. Income brackets equal to or greater than $150,000 saw an average of 32% more F&I managers who reported feeling appreciated than those who do not. But as income levels dipped, so did feelings of appreciation. Less than 50% of F&I managers earning under $100,000 reported feeling appreciated.
When F&I employees held a dual role at the dealership, working just part of their day in the F&I office, appreciation levels also fell. Only 56% of those respondents reported feeling appreciated by owners and managers.
Future Outlooks and Concerns
To discover F&I personnel’s outlook for the future and sense of optimism, the survey asked this question: How do you feel about the future of F&I? Respondents reported:
• 41% feeling extremely confident
• 53% somewhat confident
• 6% not at all confident
The 2021 survey was a little different because it allowed five responses to the same question. Response choices to that question in 2021 included: extremely, very, somewhat, not so confident, and not at all confident. The top three categories in 2021 were extremely, very and somewhat confident, which added up to 91%, versus 94% for the top two categories in 2022.
The differences between director and manager responses were also relatively minor, with 44% in 2021 and 47% in 2022 of directors saying they were extremely and somewhat confident and 39% in 2021, and 55% in 2022 of managers saying they were somewhat and extremely confident.
However, even with a positive outlook, those professionals still have concerns, says Daniel. The survey found that:
• 25% are concerned about the use of artificial intelligence (AI) technology.
• 22% are concerned about one-person sales models that allow salespeople to sell products.
• 28% expressed concerns with manufacturers pushing for direct-to-consumer distribution.
Daniel stresses that AI technology can actually benefit F&I more than hurt it. “One benefit is in training,” he says. “Finance manager training is introducing an AI product in June to help train F&I managers. They can use the app on their smartphones to talk to a ‘robot customer,’ who gives them objections they must overcome.”
AI also will allow dealerships to see past data about customers. The information will come from online machine learning and private databases, such as a DMS or CRM. “The system will analyze what products customers bought in the past, how much they spent, and create a custom menu for that customer,” he says. “It can even offer a profile of trigger words to say.”
Still, he admits, F&I professionals fear AI will eliminate them. “There is some pushback against this technology,” he says.
A greater concern among F&I professionals is with direct-to-consumer models, which dealers say could put them out of business, Daniel notes. “I tell them this is not a worry for today. The OEMs are not anywhere close to that right now.”
According to Daniel, the best way to keep abreast of the challenges is to train people well. Engage staff in weekly or monthly training to teach them new ways to attack objections.
“If you have a staff that hasn’t been trained in five to 10 years, they are working off old information and closing techniques. They are talking to customers with dated lingo that will not convince customers to purchase these products,” he says.
Concerns aside, Daniel says, “There’s never been a better time to be an F&I professional. This is a great career path. The automotive industry is a pathway to earning a very respectable living.”
Originally posted on F&I and Showroom