Top Agents Talk About F&I’s Future

At the P&A Leadership Conference at the Paris Hotel and Casino in Las Vegas, Randy Crisorio, John Braganini and Linda Fisher sat down with moderator David Trinder, CEO, F&I Administration Solutions to discuss the industry, where it is today, and where they see it going in the future.

The first topic the panel tackled was the regulatory environment that affects today’s F&I industry as a whole. “The heightened environment has been with us the last dozen or so years,” said Randy Crisorio, president and CEO, United Development Systems Inc. The only difference now, he noted, with the Consumer Financial Protection Bureau (CFPB), has been the lack of clear guidelines as to what they are looking for. But having to adapt to changing regulations is something everyone in the industry is familiar with.

“If we look at the growing professionalism in the industry, we see the drive to eliminate as much wrong-doing of the few who cause problems as possible,” continued Crisorio. He believes the current push from the CFPB is the result of a few people or companies who didn’t play by the rules, but unfortunately the industry as a whole has to suffer for that. But at the same time, he doesn’t want regulators or the rest of the industry to forget just how far F&I has come – today’s F&I office is far more transparent and professional than at any other time in the past. To combat the perceptions, and the push-back from organizations like the CFPB, he believes the industry needs to continue to move forward in the current direction, increasing transparency and training to ensure everyone in the process is on the same page.

The key, the rest of the panel agreed, is to have transparency across the board. Customers and regulators both need to see that the entire process is open and honest, and that nothing is being hidden. If F&I managers are trained correctly, everyone will feel that they understand what the products are, how they benefit the customer, and exactly how the financing is worked into the loan. With this transparency in place, regulators will, hopefully, be less focused on trying to create new rules, and will turn their attention back to dealing with those few who break the current laws and regulations.

There is also a difference between regulators looking at the products themselves, and making sure no one is presenting them in a misleading way or fraudulently, and regulating the way those products are sold. Regulating a product and enforcing a standard isn’t necessarily a bad thing. “If they regulate the performance of products, I see that as a positive for the industry,” said John Braganini, principal, Great Lakes Companies. “The customer satisfaction will get better, and we can then potentially move prices up to accommodate those expectations. However, if they try to regulate profitability, that’s a different matter.”

Braganini further noted that if regulators try to force profit out of F&I products, he believes it will simply move to another part of the dealership - dealers are in business to make a profit, something most consumers understand; if the profits are taken out of the F&I office, the dealer will be forced to add fees and charges elsewhere, and it would have a negative impact on the hard work the industry has done to create transparency and trust in F&I to this point. However, the panel all agreed that they believe this is highly unlikely and F&I profits will not be regulated to that degree.

The Role of Agents

Regulations are not the only thing that agents, providers and dealers need to be focused on. Agents today, noted Linda Fisher, founder and CEO, Dealer Assurance Group, have to be a little bit of everything to everyone. “The agent today has to be in all facets of the business,” she noted, from providing the products, to training on how to present them, and even helping set up alternative sales opportunities, such as in the service drive. “We have to be the dealers’ best friend – we can’t just drop off contracts.”

Agreeing, Braganini said, “all things being equal…we have to be able to step into the sales process from the beginning. We have got to have scale and resources, and I see fewer agencies as we go that route.” To that end, the panel agreed that if the industry does continue to move in this direction, there will be fewer independent agents who can compete in the market. It will take professional agencies, with the economies of scale that can be brought to bear, to offer those kinds of all-inclusive services.

Braganini further noted that one example of that process will be an increasing emphasis and support on dealership staffing. And not just on the training side – he can see a day when agents are helping find and place F&I personnel in the dealerships, and taking ownership of those positions with the responsibility to ensure dealerships have the right people. That goes well beyond just training.

“It’s the importance of people and structure,” said Crisorio, who does not only see agents as helping with staffing in the F&I office, but in the entire dealership, including helping to fill and train sales positions. “We see about 300 resumes every week, and we’re now bringing in a recruiter to help fill roles in dealership clients. We don’t see a lot of professionalism in sales today in the dealership. We need to help fix that with training, portals, etc., to support a compliant, performing culture.”

The Technology Puzzle

eContracting, the panel noted, is something they are actively working with providers and administrators to bring to dealers. “By the end of this year, every provider we do business with will be using an online portal,” said Braganini. “By the end of 2014, we will have no paper contracts. … You have to look at the practical benefits as well – being able to manage risk, ratings, etc. There is a huge benefit there, and you would be shocked at how many administrators are behind in their technology.”

Fisher agreed that the technology is rapidly gaining ground among dealers, and that administrators need to be working to implement it into their systems, if they don’t already have the option. “85 percent of our dealers are on eContracting,” she said. “No one wants to deal with paper.”

Crisorio cautioned, though, that it can’t be forced – there is still a large number of dealers who have not upgraded their systems or processes, so, for now, administrators cannot just abandon paper altogether. They need to have both options available for agents and dealers to work with. “We still see occasions with dealers doing paper menus,” he noted.

“We’ve seen in the last few years, when taking over dealer groups, that implementing technology is critical,” Crisorio continued. “But it has to be organized to bring it all together.” Having a mismatched set of systems and processes that don’t work together just adds to the confusion, and lessens the chances of the dealer sticking with the new system. Providers and administrators need to be able to work with a wide range of technologies – from older systems in dealerships that don’t want to upgrade their hardware just yet, to brand new systems at dealerships that are more cutting-edge.

What Agents Want

So what are the agents looking for from providers? “We want good, quality products, excellent claims administration and good technology,” said Crisorio. “Providers also need to be more selective of the agents they work with. They try to make up for shortcomings of some of the agents that they signed that don't have deliverables by offering retail training and maybe electronic menus and those kinds of things. I think there is a line to be drawn, quite frankly in a perfect world, where the provider is technologically relevant, with a great product, continually innovative, very competitive, and their process and their administration of claims is expert. I think the agencies should be delivering retail training, delivery systems, selling systems and those kinds of things.” He would like to see providers choose to work with a small handful of highly qualified agents, rather than flood the market with representatives. By having a smaller number of exclusive agents, the product doesn’t get diluted, and agents would have more differentiation – rather than a dealer having to choose between agents who are competing to sell the same product, dealers can go with the agent that sells the product they want, with the services they believe add value. It elevates the entire system.

“I also want a solid company with a good track record and highly competitive products,” Crisorio continued, noting that, in many cases, providers are playing catch-up on the technology side of the equation. He would like to see them be ahead of that curve, rather than chasing it.

“The hardest part is the people – they all have to be committed to the business. In a perfect world, I want to be a partner to the provider, not just a cog in the field,” Crisorio concluded. He wants to work with providers and administrators where every person in that company believes in their products – no matter what their job title may be. He wants to see commitment to the products and the process, and to the dealer and the end customer, and to provide the best experience across the board, at every level. And he wants to work with providers who see him, as an agent, as an integral part of that process.

“I completely agree,” said Fisher. “Also, look for the ease of business for the dealer – it has to be easy for them to use. We’re looking for companies with whom it’s easy to do business, both for the agent and the dealer.” If the process is confusing or frustrating, the dealer won’t do their best to sell the product, and everyone suffers – dealers, agents and providers will lose revenue opportunities, but customers will also lose out. If the dealer isn’t enthusiastic about showing them all the benefits, they might not realize how much they might actually need or want it.

“We’re looking for DMS integration,” said Braganini, who sees the ability to work with multiple systems as being a key point for providers and administrators. “A solution won’t work without things like menu integration and eContracting.”

“Also, with administrators, the distinction begins to blur – there are a lot of companies selling the same thing,” Braganini continued. “They need to have a clear strategic mission that is unique and sustainable.” In other words, the product and the provider and administrator need to have a clear value proposition that the agent can take into the dealership.

In the end, it was clear from the panel that agents are looking to partner with providers and administrators, the same way they partner with dealerships. They want people and companies they can trust and rely on for the long-term, and whose products they feel completely confident in selling to their dealer clients. Agents are looking to work with providers and administrators who understand that they all have equally important roles to play in the process, and when everyone steps up and raises the bar together, the industry as a whole will benefit.