Shannon Robertson: Police Yourself Before a Federal Regulator Does page: 15 F&I 20/20 The F&I Professional’s Newsletter A Division of EFI™ $4.99 VOL. 2, ISSUE 2 The Wallet Hub Q1 Research is an eye opener page 2 © Mad Marv: Control your Four Walls page 16 April-May 2021 George AngusDon’t be an Online Fool page 12 F&I Manager Turnover 1 Is There a Solution?

F&I 20/20 The F&I Professional’s Newsletter A Division of EFI™ VOL. 1, ISSUE 2 Top stories in this issue © F&I Spotlight F&I Pro Tip Stop Sign Show Me the Money F&I Pro Tip Dan Mason talks lender relations in this issue and how you can up your game by extending yourself more getting to know the reps and the programs. Page 4 Stop Sign Shannon Robertson has been trotting the nation and takes time out for some compliance perspective on self policing your products. Page 15 F&I 20/20 Spotlight F&I employee turnover. It’s arguably the greatest problem we face as an industry with no seeming end in sight. We interview some experts on the front lines for their take and those answers are eye opening. Check it out on Page 5 Show Me the Money G.P. Anderson returns with a message about time management. We all have 24 hours allotted to us daily. How are you spending yours? Page 11 Mad Marv The Four Walls of F&I. Page 16 News Around Town Produced by NADA's Industry Analysis division, NADA Market Beat is a monthly report on U.S. new light vehicle sales; it replaces the NADA Monthly Sales Recap. at June 2020 The Wallet Hub Q1 2021 Auto Financing Report Consumer research and ratings firm J.D. Power has released its December 2020 auto sales forecast, and the trends look slightly positive for the industry, as new-vehicle retail sales were projected to have a 1% increase compared to December 2019. Read about this expansive report here. 2

Well, it looks like Q2 is poised to prove that Q1 was no flash in the pan. Like many of you, I’m hearing records getting smashed all over the place. We just sat through another corporate meeting and all our stores are breaking glass everywhere. I’ve also been reading many posts in EFI about some of your success stories and am cheering right along with you. Though some would like to attribute this uptick via stimulus money, I can tell you those coins have nothing to do with our red hot Super Duty trucks flying off the lot with five-figure down payments from folk who don’t qualify for the extra. The semiconductor chip shortage is still causing headaches. But in spite of this, people are still buying new vehicles. This is driving the market with a buying frenzy among consumers. Like many, our truck inventory is way down but it hasn’t stopped customers rather, they’re adjusting and buying what we have. Used wholesale prices-especially trucks-are out of the books. F&I continues to lead the charge and I expect April’s strong early start to continue into the summer selling season. This extra wave of business needs to be recognized and handled expeditiously. Manage your time wisely because business is great! Are you going to get your share? I hope so. MM Bits & Pieces………. Partners… Lithia Motors buys The Suburban Collection The acquisition is the first major platform in North Central region and is expected to add $2.4B in annualized revenues and includes all 56 Suburban Collection franchises, making today's announcement one of the largest number of franchises ever sold in a strategic transaction. Movements… NEUENSCHWANDER SUCCEEDS HAUGEN AS PORTFOLIO CSO Dan Haugen, chief sales officer for Portfolio, has retired, effective Dec. 31, 2020. David Neuenschwander, president of National Automotive Experts and NWAN, the Strongsville, Ohiobased company acquired by Portfolio last year, succeeds Haugen as CSO. F&I 20/20© is a bi-monthly Newsletter for the professional F&I Practitioner. This publication is a division of Ethical F&I Managers (EFI™) and is copyrighted. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher at: Marv Eleazer 4043 Liska Circle Valdosta, GA 31605 fordpantera@yahoo.com (229)460-3310 Editorial Board Gregory Arroyo garroyo@dealersocket.com Giving it Back... Davis Toyota of Orangeburg An Orangeburg auto dealership has begun a community outreach effort designed to help support various charitable and community organizations in Orangeburg County. Davis Toyota kicked off a Community of Caring Initiative in December and will continue the program during select months of the coming 3 Tony Dupaquier tonyd@theacademylive.com Shannon Robertson shannon.robertson@afip.com G.P. Anderson gp.anderson724@gmail.com

The Lost Art of Lender Relations by:Dan Mason O ne of the most challenging, frustrating, and confusing aspects of being a finance manager can be working with their lending partners. With the ever-changing l andscape and the continued adjustments they are making, it is sometimes overwhelming and hard to keep up. Let’s shed some light on how to make this simpler. First, it is imperative to learn and know ALL your lender programs and parameters. This seems like a huge task given the large number of finance companies most dealers have access to so, study them one at a time. The key things to look at are which credit bureau they use, what score ranges are acceptable, and how these are grouped into tiers. Next thing is the maximum front-end, back-end, and total advance as a percentage of vehicle value. Then analyze which valuation book they use for pre-owned. Is it clean trade or retail? If the car is new, do they consider invoice or MSRP as the value? And of the allowable products, which are counted toward front-end ad or back-end advance? Dizzying, isn’t it? So, instead of dismissing your reps when they stop by, pull out their rate sheet and go through the programs to find out what their niche is and how to best utilize them. Second-and this is critical-start creating relationships other than business with your reps, analysts, funders, and all the supervisors. Stop the mindset that they need us more than we need them. This couldn’t be further from the truth! We are in the relationship business. Learn about them, their families, and their hobbies. Call just to say hello once in a while because you always attract more bees with honey. When you call your buyers, don’t just jump into a deal, have a conversation about them, and genuinely take an interest. This one alone will get you more deals and most times, better calls for yourself and your customers. Third, let’s talk about funding and how to get your deals to the front of the line. The first part is simple. As soon as you see your deal in the funding queue, pick up the phone and call. This should be just a friendly call that sounds like this. “ How is your day? I just wanted to give a quick call as I saw some deals hit the queue. What can I do to help get these done?” “We are in the relationship business. Learn about them, their families, and their hobbies. Call just to say hello once in a while because you always attract more bees with honey.” Being consistent in this will train the funders to put your deals first because they know that you will be calling. It is also important that after you upload or fax a missing item that you follow up within 15 minutes to ensure it was received. They want to fund deals just as bad as you do as that is how most of them are paid. And when a deal books, call your funder just to say thank you. Do this often, even if it was a squeaky clean 800 score that funded quickly. Understand that most funders only hear from dealers when something goes wrong. Put yourself in their shoes and let them know how much you appreciate them and what they do. You will make their day and they will remember you and what dealership you are from. The next time they see one of your deals, they will go out of their way to get your deal funded. Lastly, do your homework. Stop just looking at the credit score because that’s not F&I. There are plenty of customers that were 800 scores a year ago but have been impacted by the pandemic. What you should be doing with these is conducting a customer credit interview in the salesperson’s office alone with them. Bring a copy of their credit report and go through past due accounts to find out what happened. Rehashing deals is not about bullying a lender into a deal but helping the buyer make a great decision based on facts. They have great behind-the-scenes tools but sometimes need our help with the information we get. Help them help you. Treat your lenders and their staff like the dealer partners they are and remember that they’re real people under huge pressure just as you. Make a friend, create a relationship, and be a true professional. Dan Mason is the Executive Vice President for Principal Warranty Corp. 4

F&I Spotlight F&I Turnover We examine the problem of F&I manager turnover rate in this issue hoping to shed some light and offer up solutions from both sides of the table. By: Marv Eleazer L ong the bane of car dealers since the position gained prominence and importance to the bottom line, Finance & Insurance Manager employee turnover creates some of the biggest headaches for dealers. For the April-May issue of F&I 20/20, we tackle this complex problem and offer thoughts from some front-line experts who’ve been working with dealer groups for decades. So, the question on the minds of many is, ‘Can the dilemma of F&I turnover ever be solved?’ In a word, Yes. However, there are a few caveats that would need to be addressed and dealt with before an impact could be realized. We’ll identify and discuss them later on. For now, let's talk with a few experts on the front lines who have reams of data on the subject. Tony Dupaquier is the Training Director for The Academy-an F&I training facility under the IAS umbrella of companies based in Austin Texas. We reached out for his opinion and solution on the matter: “We’ve witnessed tech worming its way through dealerships and without doubt, it speeds things up with efficient design. These flashy and cool tech toys that dealer staff use today including Ipads, tablets, and DocuPad desktop systems not only marvel customers, they also help manage compliance as well as ensuring the 300% rule is observed”. He continues “But tech can only take you so far. No device or process managed by technology can ever compensate for a skilled F&I practitioner. It’s simply not the answer. Do we need it, yes but don’t expect it to lift a subpar or mediocre producer to greatness because it simply won’t happen”. “This is still a people business and skilled professionals are needed to relate to customers”. Dupaquier reflected on last year’s downturn as one of the reasons. “In dealing with the many dealership groups that we do, we saw most decide to cut training budgets last year because of a downturn in sales due to the pandemic and wondered if that contributed to FIMs changing stores”. He added “Other reasons F&I managers are replaced in stores is the tenure-pay disparity. Experienced managers who don’t keep up with changing trends can easily fall behind the learning curve and get replaced by younger up-and-coming ones for less pay. It’s fair to say that being set in one’s ways can be a negative”. 5

B ut perhaps the number one reason they leave is perceived opportunities which can include better working conditions. Says Dupaquier, “I estimate 75% leave because of pay plan disagreements where a dealer has cut the commission or made the job much harder. The other 25% leave for better working conditions”. Tom Reddin works with scores of dealers on the east coast in his capacity as Senior Business Development Manager for North American Automotive Group based in Cumming, Georgia: “At least 40% turnover exists in the stores my company services because many believe the grass is greener on the other side. But what they overlook is that grass still has to be mowed, fertilized, and watered. The grass ain’t always that much greener he says. “I’d say upwards of 75% of those managers change stores believing things are better elsewhere when in fact, similar problems exist there too”. And pay is only a part of it. “Though the pay plan may seem great on the surface, there will be other obstacles not easily identified in the initial interview. These aren’t viewable until you’ve worked there for a while. Pretty soon, the headaches return after the shine has worn off and you find yourself wondering if the move was worth it”. Dale Patten is an F&I Development Manager and Academy Instructor for Great Lakes Companies in Portage, Michigan: “I have to agree with my colleagues on this. A 40% annual turnover rate seems about right with a large part of the remaining 60% accepting the misery of long grinding hours”. He continues “Pay rates, hours, and better opportunities round out the top three reasons employees jump ship in my experience. Additionally, unrealistic expectations often drive them to greener pastures because of working conditions. This is usually attributed to the processes that link sales, the desk, and F&I which can often break down due to poor implementation”. Patten says the problem runs all the way to the top. “Dealers bear their fair share of blame in this too. Attending a 20 Focus Group meeting and getting wowed because another dealer’s F&I department is $300 higher per copy can be frustrating to them”. “So, they return home and haul in their finance managers demanding more without taking the time to perform a study of what’s currently happening followed up with an action plan”. He surmises how important this is. “The disconnect from sales to F&I can be huge because everyone wants to deliver the car at max profit and if the problems aren’t identified, then nothing will change. This dysfunction can cause an F&I manager to pull the plug and seek employment elsewhere which is why simply demanding more output without first understanding what’s going on can be off-putting to staff”. 6

T hen there’s the pay plan dilemma. Many F&I consulting companies-including the National Automobile Dealers Association-recommend departmental compensation in the 15-18% range and some pay even more. This is reasonable in the mind of most managers with some top performers earning even greater percentages based on pay plan composition. Most dealers have adopted matrix pay programs that incentivize finance managers to produce specific product sales such as Tire & Wheel or Key Loss Protection so it’s a win-win for everyone. Except when it’s not. That occasion is revealed when a manager has several huge months and hits the outer limits of the pay plan resulting in a larger check than executive management believes should be written. Then comes the bad news. Instead of glad-handing the F&I staff, the ominous pay plan adjustment is handed down wrapped in fancy words. Now, to be fair, pay plans should have limits but not in the form of greenbacks. Pay plan limitations should be about percentages with product-based goals and rewards built-in. If the FIM earns 19% or 20% because he had a super month, pay him! Think about the percentage he made you and the dealership because of his outstanding success that particular month. But, I can hear some of you grousing right now. So, let me ask you a question, who wrote the pay plan? Was it someone in the accounting office, the General Manager, the F&I product provider’s rep , or an OEM representative? I ask this because it’s important to approach commissioned pay from the top down. Every possible scenario of that pay plan should be completely understood so there are no surprises. Now, we know that pay isn’t everything as some will leave for a lesser paying job due to other factors. These can include excessive hours, six-day work weeks, co-worker dissatisfaction, and lack of pride in a job well done. How is this curable? Let’s unpack some of this and see if there is a solution from the dealer’s side of the table. We all know how important time off is with family. The worker takes a long weekend and comes back refreshed and thankful for that time off then knocks the cover off the ball. Tip: Establish a five-day workweek by cross-training your desk managers and sales managers to fill in when your finance manager is off. 7

T wo very important things will be gleaned from this. Namely, the FIM gets time off with his family and returns refreshed and the other managers improve their skill sets in F&I especially if they’re paid on the department as most are. Also, make certain your FIM takes yearly vacations and compensate him while he’s gone. If reasonable, create a spiff program for a limited time as a carrot for exceeding goals. Sound like a lot of adjustments? Well, it is but what’s worse? Becoming a little more proactive in retaining someone who is already familiar with your staff, processes and has proven to be a team player or let him leave disgruntled. The result could likely result in him working for your competitor and increasing his sales. Now, let's look at F&I manager reasons for turnover that can be solved. We’ve already read why F&I managers jump ship. As Tony Dupaquier pointed out, it’s the perceived opportunities another store may offer-not actual reality. Those perceived opportunities can be in the form of a lateral move to the desk or perhaps even a GSM/GM promotion but it usually means a more harmonious work environment and many will leave for less pay to achieve this. Though the problems you’re disgruntled about may not be so prevalent in another store, I can assure you there will be other issues that may be worse so look before you leap because still waters run deep, to coin a phrase. Let me first say that I fully understand why a finance manager might become disheartened due to problems in a store. Some can include things you won’t learn about in training class. These are learned from on-the-job experience and they can be solid reasons for looking elsewhere. I’m talking uncooperative staff, missing data on deals causing extra work, lack of time off, pay cuts, bad bosses, and the list goes on and on. As was already mentioned by Tom Reddin, that green grass across the fence line has to be watered, fertilized, and mowed. If you think for one second a job change is going to be without some of the same conflicts you’re now experiencing then you had better think again. Though the problems you’re disgruntled about may not be so prevalent in another store, I can assure you there will be other issues that may be worse so look before you leap because still waters run deep, to coin a phrase. You see, we often get so rapt up with the problems in our store that we begin majoring in the minors becoming easily agitated. And, we all have pet peeves that drive us mad. 8

L isten, there’s a reason you applied for and accepted the position you’re at right now. But perhaps, some of the luster has worn off. So, I’ll ask the question “Are you really trying hard to ignore the things you cannot change and focusing on the ones you can like the serenity prayer suggests? If not, then I suggest you step way back away from the forest and take a look at this from a broader picture honestly analyzing what’s stuck in your craw. You may just find the problem can be worked out with better communication and forgiveness. Yes, I said forgiveness. Co-workers are going to tick you off from time to time and won’t even realize that you’re brooding. Stuff your feelings away for a few minutes and have a chat with them and use it as a training opportunity. I’ll wager things will change faster than you thought possible because people want to get along and do a good job. Help them help you and renew your interest in the store you now work in. You may just find out that grass isn’t so green after all. Famed F&I trainer and menu pioneer-George Angus of Team One Research & Training in Scottsdale Arizona-was once having a conversation with a top producer he had known for years. This fellow ran great numbers and checked all the boxes of a pro. He was looking for another job recommendation as he had done in the past. Angus refused and told him why. Seems this gent had a problem after several months on the job of criticizing everything wrong with the store including other managers and even the GM. Strife would soon follow, and he would move on to another job expecting near perfection because he was so good at his job. Angus offered up perhaps the best advice anyone could get in this situation. He said, “Find yourself a home and build on it.” Translation: No house is perfect and the longer you live in it, the more you’ll have in maintenance and repairs. Moral of this is to stay put and be content where you are because you can’t possibly understand other dealership issues with just an interview. You already know what you have where you are so learn how to work with it. So, is there a good answer to the problem? Dupaquier believes so. “Invest in your people with training on a regular basis. Never cut corners where their development is concerned”. His answer got me thinking about all the money spent on automotive tech training on an annual basis. Now, I realize OEM’s require tech certifications before the factory warranty will pay but there’s a darn good reason they do. It’s because they know well-trained technicians are way more efficient and reduce the likelihood of a customer returning because the job wasn’t done right the first time. Now, what if dealers spent that kind of money in F&I training yearly, how much better would their managers be? And in that same vein, making certain their people have sufficient time off to meet the needs of their families. While there are some great dealers out there concerned for their employees and get it, we know there are others who don’t and may never will. Developing and maintaining a great work culture will attract the right people and retain them long term thereby reducing turnover. 9


Don’t Wish Time Away T By G.P. Anderson ick-Tock, Tick-Tock, Tick-Tock goes the clock. You know, we often hear people say ‘I wonder where all the time goes?”. And as the saying goes ‘The older you get the faster time flies’, yet when you’re young it seems time creeps along. As the youngest, you wish you were the oldest child. Your sixteenth birthday has you wishing you were eighteen and twenty one is right around the corner. Then one day you turn 75 and start wondering where all the time went. Sobering, isn’t it? You see, time has both advantages and disadvantages. In your environment, decisions you make and how you were raised all play a part in how you view life. So, consider this-we all draw the same salary of time. We all get 24 hours of time every day and 168 hours a week. We’ve often heard folk refer to, "Times like these". And like the current pandemic, every generation has had its various fears. These include the tumultuous ‘60s when assassinations and the Viet Nam war dominated headlines. The seventies brought about recession fears with record oil prices, double-digit unemployment and interest rates. The 2000s further stoked the fires of financial doubt with the dot com bubble burst and major banks cooking their books to prop up bad investments. The list of concerns is endless and unfortunately, will continue. So, can you control time? It sounds like a ridiculous question because we know we can’t slow down nor speed up the clock. Yet if you ask prison inmates who have relinquished time for their crime, they’ll tell you they’re able to hurry it along busying themselves with projects. But like those inmates, the question should probably be “What can I do with my time to become more productive?” Hence the saying, "Use time wisely." Tick-Tock, Tick-Tock, Tick-Tock goes the clock. Are you empowered, challenged, independent, and flexible with support structures that help you manage those twenty-four hours? Understanding your current situation and goals with responsiveness and clarity are vital else the ticking will cause you to miss an opportunity. Tick-Tock, Tick-Tock, Tick-Tock goes the clock. Consider this: over the next quarter-century, some $70 trillion in assets is expected to pass from one generation to the next - the largest wealth transfer in U.S. history! Often referred to as The Greatest Generation, baby-boomers officially began retiring around 2012 with many still working today. Most started out in the mid-1940s earning around 40¢ an hour. And it’s mind-boggling that having begun with such paltry pay and virtually no wealth handed down to them that they can now pass along such huge numbers to their heirs. How can this be? Having been taught about the Great Depression, they learned how to balance their work lives with family thus creating proper environments for their offspring. In the process, they saved and invested seeking a better life for their children. This happened because they carefully managed their time to max proficiency. The Greatest Generation built massive things after the war and was part of a financial renaissance perhaps only eclipsed by the times we now live in with technology that seemingly makes millionaires overnight. From Galileo & Albert Einstein to Elon Musk & Mark Zuckerburg, all great visionaries get 24 hours a day the same as we. You may call their success luck and perfect timing, but I disagree. These industry leaders all realize how precious time is and used it to their advantage often leveraging the talents and skill of others to accomplish much more than a single person could alone. My question to you is, ‘What are you doing with your time?’ Tick-Tock, Tick-Tock, Tick-Tock goes the clock. Are you slumming in a recliner on your day off while your family is at the park? Are you spending valuable time at work on social media, online shopping, or texting friends instead of handling down-time customer service issues between deals? Listen, this article isn’t about how to improve your PVR with some catchy new closing technique or word track. There’s plenty of that on Youtube. I’m talking about the deep things in our worlds which can drag us down and waste away time if we’re not cognizant. Learn how to compress your time by moving fast and adopting smart time-saving actions unfettered by the one-size-fits-all work habit. Tailor your solutions to meet your needs. Attend training workshops and conferences going forward. Start committing to surrounding yourself with new ideas. Own your tomorrow. Tick-Tock, Tick-Tock, Tick-Tock……………….. 11 GP Anderson is the Finance Manager at Thielen Motors in Park Rapids, Minnesota

The F&I Prophet-George Angus-has something to say “…and remove all doubt” Growing up in Western Michigan in the 60’s, teachers sometimes attempted to plant some wisdom in our hollow minds by having us memorize quotes from great leaders and thinkers. One quote that I have tried to remember is one that is said to be from Abraham Lincoln (although the Book of Solomon has a similar saying). “Better to remain silent and be thought a fool than to speak out and remove all doubt”. Online rudeness. I have been reading Automotive News for over 40 years. And this year, for the first time ever, I noticed they have attached a notice to the comment section of their online articles: “ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse”. Automotive News was founded over 90 years ago. Why hasn’t this disclaimer been necessary until now? 12

What has changed? It’s seems simple enough to me. The internet has created a culture where people who are lacking in social skills, mentally mis-wired, or who are unacceptable in any other venue, to interject themselves into today’s mainstream social discourse. And the internet gives them courage and a forum where they are (they think) anonymous. Clearly, online communication has created a new nastiness in how the public communicates. And there even seems to be a disturbing trend among people who, seemingly reasonable in everyday life, become some kind of ugly alter-ego when they go online. And, now, sadly, this trend seems to have invaded our industry. You can certainly notice it in the discourse of some online industry groups, even when posters know they are being clearly identified. There seems to be a new set of rules regarding common courtesy and dignity that are degrading any useful discussion. And even some decent people are getting sucked into this vortex of rudeness. Responding to rude online comments or criticism. No one likes to be criticized. But it happens. And it’s easy to want to fight back. Especially when you are smarter or better informed than the critic and can easily shut them down. However, when you do so, you might be losing the battle and lowering yourself to their standard. Most times, your response is exactly what they are after. They crave conflict. They feel it makes them equal to you. Handling online baiting or criticism in a positive and healthy way is an essential skill we must develop to maintain our public image, sanity, and well-being in the internet age. View your response from the perceptive of others. How your critic views your response is irrelevant. They are trying to suck you into a confrontation or anger you. Don’t let them. Look at the conversation as if you were watching someone else having it. Would someone’s nasty response to an insult gain your respect or would someone taking the high ground be more impressive? Some strategies: -First, alcohol and internet do not mix. Many internet blunders are the result of the loss of good judgement from alcohol. Don’t create that nightmare situation where you wake up in the morning and have to start chasing down and trying to erase alcohol induced comments from the night before. (And sorry, everybody's already seen them). -Perhaps, you don’t need to respond at all. You don’t have to dignify low-life comments. Everyone else knows the offender is a jerk. They’ll find someone else who will engage them. Block them if you can. -If you do respond, do it with kindness and dignity. Act as if you didn't take offense at their comment. Point out the value of their opinion and offer positive suggestions. They’ll hate that. It’s not what they are after and it makes them look bad. 13

-If the harassment becomes too bad or feels threatening, report it to the internet provider and, if severe enough, to the proper authorities. Other types of online confrontations. Sometimes the criticism or comments are not anonymous and come from sources we know. Identifying the source of the criticism is a big part of dealing with it. There are different kinds of criticism we can encounter. Online criticism from coworkers. If they are acting in an unprofessional manner or make harsh non-work-related criticisms, go over their head. Do not let it continue. Advise your supervisor of the situation. If they are acting that way with you, they are probably acting that way with others. Criticism from customers. A bad comment from a customer on the internet can wreck your day. Customer criticism is part of the digital age. If those complaints are ignored, social media is an easy way to malign the dealership. And you might be surprised at how quickly criticism can be diffused if complaints are acknowledged and respected If you made a mistake, contact the customer directly and admit it, (With management approval, of course). And try to offer a solution that the customer will accept. Accept the customer’s criticism as a learning experience. Nobody is perfect. But we can learn much from those difficult situations. Criticism from competitors. Take competitor’s criticism as a positive. This, in my experience, is a sign of success. What I have learned is that if you are so successful, and such a threat that your competition takes the time and energy to try and tear you down, you are obviously doing something right. And their attempt to tear you down online exposes that to everyone. The best way for a company to get me to shop their competition is to try to tear them down. It tells me they are afraid of the inferiority of their own message or product. Criticism from your competition is a complement. And there is no need to respond. Always take the high ground online. The important thing to remember is that the way you handle your online presence lasts forever. And it will affect your career, self-esteem, and peace of mind. Smart people measure their words. “Better to remain silent and be thought a fool than to speak out and to remove all doubt”. George 14

Police Yourselves By: Shannon Robertson, AFIP Executive Director L ast issue we featured Brother Dave Robertson preaching a warning. “The Democratic party now controls the White House and both houses of Congress, giving it nearly unbridled leverage to pursue its agenda. What does that mean for you? You can expect both the FTC and CFPB to be significantly more aggressive in both oversight and enforcement than during the last four years, particularly in the areas of vehicle sales and F&I practices.” I’d like to expand on his message a bit more this month. The commonsense question that will likely be asked of you in the very near future is, ‘Based on the retail prices you charged for aftermarket products, plus the cost of financing them for the terms of the Retail Installment Sale Agreements, do they provide benefits to those customers commensurate with the total amounts paid for those products?’ In other words, how often do your customers have the need to file claims and what are the dollar values of the benefits derived? The acid test will be the frequency and severity of the benefits paid over statistically relevant periods of time. Granted qualified actuaries will generate the actual figures for those value-added products and services. The question is ‘Do you know which ones provide the greatest number of customer benefits – and those that don’t?’ Typically, the pendulum is rarely in the middle, either too many claims or too few. Too many claims won’t be the issue in this situation, the focus will be on those with too few, especially those products and services with a statistically and significantly low claims ratio. Obviously, adjustments can be made with respect to retail prices charged. Certain peripherical or second tier products and services-which are grouped together-then sold as a one price package offering i.e. “bundled products” can blur the claims line. However, if you’re currently selling products or services that fail the ideological commonsense test, you should begin an analysis to avoid becoming a target and start culling them now. I’m talking about products that have claims loss ratios in the tenth, hundredth, or thousandth percentile. In the mind of a regulator, very low claims ratios simply don’t pass the smell test of being value added products. This may sound ludicrous but based on some anonymous tips we’re hearing, you can bet the newly energized federales don’t think so. “Given the fact the CFPB currently doesn’t have oversight of franchised dealers-thanks to clever lobbying by the NADA-they do have authority over banks. And some of those finance sources buy your contracts.” Even though he’s compliant with the rules, a well-known finance manager was recently warned by his captive about product prices on contracts they’ve been buying from his dealership. Seems they must report certain irregularities based on internal guidelines to the bureau. Big Brother is still watching. Another example was a finance manager who recently sold a service contract on an F-150 in excess of $14,000. Now, this particular manager is either extremely good or the customer was equally as ignorant especially considering the likelihood of any claims approaching this much over the life of ownership. The two questions asked of this finance manager were; 1. what is the average selling price for a service contract for that same vehicle? 2. What answer would you provide a regulator or an attorney on why you chose to sell this service contract at a price significantly higher than the average? The timely corrective action axiom normally holds true, the price paid for sins past is often less than the price paid for sins present. Corrective action on your part, as a dealer, should be implemented to avoid scrutiny. The best way to stay off the radar in these instances is self-imposed policing by establishing-and enforcing-product profit price caps. The last thing anyone wants is an FTC investigator poking around in deal jackets. To aid dealers, NADA has published a step-by-step guide under their NADA Management Series section entitled Voluntary Protection Products: A Model Dealership Policy. Taking action and being spared the negative publicity and potential fines when it is left to the regulator to expose a practice deemed to be unfair or deceptive can easily be avoided. You can do it yourself or………………….. the regulator will do it for you. 15

Your Four Walls I by: Mad Marv enjoy watching a good boxing match from time to time. One of the things that has always amazed me is the intensity placed on the fighters. Everything gets thrown at them including grueling sparring sessions, exercise regimens, and a strict high carb diet. The pressure must be enormous. Publicity, pre-fight press interviews and the public weigh-in can be huge distractions. A fighter must mentally prepare by ignoring all of this. Both men must devote their focus and concentration after the strategy developed during training. Styles vary and some boxers like to slug it out while others are more scientific in their approach. The Foreman-Ali fight in 1974 was a perfect example of this. Foreman’s strategy was to put Ali into the ropes early where he could quickly end the match. Ali, on the other hand, trained for exactly that strategy and enduringly allowed sparring partners to beat his midsection and arms to a pulp in preparation. Ali never lost his focus as Foreman ran out of punching power in the 8th and was sent to the canvass by a patient 3-1 odds underdog. Ali defied his worried corner’s advice between rounds to ‘dance’ away as he told them “Don’t talk. I know what I’m doing”. His method of using the ropes yielded one of the biggest upsets in modern boxing and is still an all-time classic. In addition to all the other things surrounding a fight, there’s the crowd noise. A professional pushes all that aside and focuses on what’s happening inside the ring. As an F&I manager, there is plenty of outside crowd noise coming from everywhere to distract you. Salespeople who’ve worked a customer down to the penny pleading to take it easy on their customer because “He said he’s not paying a dime more on payment”. Then sales managers are telling you how badly they need to move this unit because it’s aged. This is when a professional remains internally calm while readying for the customer visit. If you’ve plied the trade for awhile, you know an F&I manager’s day is usually filled with plenty of clerical work. Chasing stips, collecting missing data such as incomplete payoffs and insurance info seems like a never-ending job. It’s understating to say that an F&I manager is a proficient multitasker because it comes with the territory. The job demands you develop and use your sight periphery which can cause you to see the shortcomings in others. Salespeople skipping steps such as the demo ride or walk-around can make the job of a desk manager much harder and ultimately, more difficult in F&I because the customer isn’t as emotionally invested as they should be. This often creates tension, and you find yourself trying to coach salespeople as though you’re the sales manager. It’s easy to do because most of us came from sales. We know how to do their job. Yet many staffers skip steps because they're either swamped or just plain lazy. Next thing you know, you’re standing outside, and a customer drives up. You start hunting down a salesperson and telling management they’re missing walk-ups. Before you know it, you’re neck-deep in trying to manage the sales department. Here’s a tip: You’re not the sales manager and unless you have direct authority to hold them accountable, then your best should be spent managing the four walls of your office. Trying to manage people outside of your office is akin to listening to the crowd noise and letting the wrong things affect what your job is all about. Listen, your job is hard enough as it is! If you want to spend time training them then do it where F&I is concerned. Teach them how to develop great turnover skills, when to get an F&I manager involved, and how to accurately fill out a credit application. Otherwise, you’ll be left frustrated and mentally exhausted trying to manage them beyond F&I. Instead, help by training them-when waiting on bank approval-to introduce customers to the fixed ops department where customers will bring their car for service. As I already said, there's plenty in F&I to keep busy throughout the day. Focus on your four walls and watch your numbers improve. Good luck and keep closing. 16

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