Program How It Works Key Features What It Achieves U.S. Federal Income Tax Consequences Hybrid Structures Dealer receives commission for sale of F&I products plus underwriting and investment income through a combination of participating structures. Hybrid structures allow programs to be built to achieve specific dealer objectives. May be set up for partners, key associates or family members. Split business among a combination of participating retro/CFC. Customized. Varies. A Strong Advisory Team Can Craft a Plan That Best Fits Your Goals Determining the right F&I approach requires having the right advisory team in place. Anchor your search with a strong team of specialized experts who can help you hone in on your specific objectives and identify a profit participation program that best meets those goals. Your team should include trusted individuals who bring insights and informed perspectives from many angles, including: • An F&I program provider who can bring numerous options to the table and is prepared to tailor a formula to your needs. • A tax advisor with a keen understanding of the tax code — current laws, in addition to clear projections for how future tax updates — including the sunset of provisions of the TJCA that may impact the direction you take. • A CPA who fully grasps how your strategy affects your business finances and impacts dealership valuation. • An attorney who has the experience to advise you on how to structure your program legally for maximum effect and resilience. • A banking advisor who can set up appropriate accounts and structure trusts for your plan. Flexibility is Key To Implementing an Effective Long-Term Strategy Change is a constant for your business. From evolving tax laws and fluctuating business cycles to market swings and macroeconomic ebbs and flows, external forces that affect your dealership are constantly shifting the playing field. Your goals and plans change over time as well, so your profit participation program shouldn’t be set in stone. Make ongoing conversations about your current F&I plan a priority — the effectiveness of your strategy can diminish if it remains static. It’s essential for dealers to work with a program provider that brings multiple options and a proactive mindset — a partner who’s prepared to adapt your approach to address your changing needs. Your advisory team should meet regularly to assess the status of your plan (quarterly or semi-annually is ideal). That includes discussing any changes to your objectives and examining any shifts in the broader business landscape or economic environment that might impact your dealership. Your strategy can provide meaningful earnings to support overall dealership profits or help meet your targets. Depending on your course of action, F&I profit participation can impact the timing of your business cash flow. As part of your planning, F&I and reinsurance can be invaluable tools that expand your options for dealership transition and succession planning. Special thanks to Matt Joffe, managing shareholder for Total Warranty Services (TWS). TWS specializes in creating customized F&I programs including vehicle service contracts, as well as all ancillary protection products. The TWS participation team can provide a customized underwriting participation program to fit each client’s unique goals. TWS has worked with over 1,600 auto dealerships and is one of the nation’s top 10 largest F&I product providers with over $1.5 billion in written premium and over seven million contracts sold. To find out more about how TWS can help your dealership, contact Matt Joffe at mjoffe@totalwarrantyservices.com. Truist Bank, Member FDIC. ©2024 Truist Financial Corporation. Truist, the Truist logo and Truist Purple are service marks of Truist Financial Corporation. Equal Housing Lender. 22 CATA UP TO SPEED
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