RIA Dealer Response Plan · BC Auto & RV
Protect the contribution.
Prove the replacement.
Start with the products your dealership can continue selling. Measure the part that could change, then test whether a practical response can close the gap.
A planning method from Mechanus IQ. Updated September 12, 2026. Examples are hypothetical Canadian-dollar amounts, not dealer averages or forecasts.
The comparison
Keep three cases on the table.
No product loss
Hold contracts, product gross and pay plans unchanged. Gross loss is $0. Add any incremental compliance expense separately.
This is the null case: a comparison point, not a prediction that nothing changes.
A defined change
Select the products, volumes or margins that change. Identify whether the change is observed, provider-confirmed or an assumed stress input.
Unknown customer take-up does not become an automatic percentage loss.
A tested replacement
Add supported alternatives to the downside. Deduct their commissions, launch costs and ongoing expenses. Show the shortfall that remains.
Include ramp time and capacity. A spreadsheet result does not establish customer demand.
The working plan
Six steps before you change the business.
Assign a person and a review date to each step. Keep auto and RV inputs separate, including their seasonal sales patterns.
Map what you can keep selling.
Inventory each contract, insurer or obligor, provider, benefit and sales path. Ask providers for written product classification, B.C. availability and licence support. Split bundles into their components; a familiar product name is not a classification.
Owner: F&I lead with providers and qualified advisers. Output: a product-by-product continue, replace or unresolved list. Use the product matrix.
Build the licensing and delivery file.
Prepare the business, insurer, designated-representative, training and disclosure evidence. Budget the incremental work from actual quotes and staff time. Council's published programme describes proposed requirements, including E&O and an insurer contract. Council: getting licensed.
Owner: dealer principal and compliance lead. Output: named responsibilities, missing evidence and a dated action list. Verify the applicable transition and application timing with Council; do not rely on an assumed opening date.
Measure the contribution at risk.
Reconcile product sales, provider costs, earned benefits, refunds and chargebacks to your statements. Then calculate before-and-after FSM and sales-manager pay from the actual plans. Use one final economic state for each product.
Owner: controller with payroll. Output: separate gross, commission, other expense and operating-profit changes. Hold unsupported payroll relief at zero. See the worked math.
Test the response against real capacity.
Compare provider substitution, voluntary repricing, a different supported product mix and appropriate penetration improvements. Check customer fit, eligible deals, existing contracts, cannibalization, provider terms and delivery capacity before counting an offset.
Owner: F&I and sales leads with the controller. Output: incremental contribution, required extra contracts, achievable contracts and the remaining gap. Increased sales are a candidate response, never an obligation placed on customers.
Protect people, process and cash.
Work through training, handoffs and pay-plan implications with the affected team and appropriate advisers. Build a weekly cash schedule for receipts, refunds, payroll, setup spend and borrowing. Check receivables and funding exceptions against records.
Owner: controller and operating managers. Output: staffing and cash requirements through the ramp. Earlier collection of an existing receivable releases cash; it is not new product profit.
Run a small, measured rollout.
For a supported product and authorized sales process, compare actual take-up, cancellations, contribution and workload with the response case. Scale only when the evidence supports it. Revisit the plan when provider terms or final requirements change.
Owner: dealer principal. Output: a dated review of results and remaining shortfalls. Give lenders a reconciled evidence packet when needed; lender acceptance and financing outcomes remain their decisions.
Open the workings
Where every number comes from.
Hypothetical model: all numbers below are deliberately selected teaching inputs. The legal sources establish the regulatory statements, not these volumes, rates, costs or outcomes. Replace each input with your own evidence.
1. Start with one before-and-after product calculation
For each product, multiply contracts by gross per contract after provider cost and identified gross adjustments, before employee commissions. Use the same period. Reconcile cancellations in the volume or the gross adjustment without subtracting them twice.
Gross reduction = total gross before − total gross after
Scenario operating profit = baseline operating profit + change in gross − change in commissions − change in other operating expenses
A removed product has zero contracts in the after state. Do not also apply a margin haircut to that same removed gross. A provider change or additional sale already included in the after state cannot be added again as an offset.
Null-case illustration: unchanged product gross and commissions, with an assumed $10,000 incremental operating expense, means $0 gross loss and $10,000 less operating profit. The $10,000 is a teaching input, not an estimate of RIA compliance costs.
2. Separate the dealer's contribution from employee pay exposure
Selected annual inputs: F&I gross falls from $500,000 to $400,000; the FSM rate is the selected 20% modelling default; the sales-manager rate is 2.75% of the specified F&I base. Replace these rates with the actual plans. They are not standard pay plans or measured market averages. Front-end gross is held unchanged, so its commission change is zero.
| Annual change | Manager paid before FSM deduction | Manager paid after FSM deduction |
|---|---|---|
| FSM pay reduction | $20,000 | $20,000 |
| Manager F&I pay reduction | $2,750 | $2,200 |
| Combined commission-expense reduction | $22,750 | $22,200 |
| Dealer contribution reduction | $77,250 | $77,800 |
Before-FSM base: $500,000 × 20% = $100,000 FSM pay, and $500,000 × 2.75% = $13,750 manager pay. After the gross reduction, these become $80,000 and $11,000. Dealer contribution falls from $386,250 to $309,000: a $77,250 reduction.
After-FSM base: the manager's base falls from $400,000 to $320,000 after FSM pay. Manager pay falls from $11,000 to $8,800, a $2,200 reduction. The dealer contribution reduction is $100,000 − $20,000 − $2,200 = $77,800.
The employees' lost commission is part of how the original gross reduction is shared. It is not an extra dealer revenue loss. The contribution shown is before other operating expenses, not dealership net profit.
Use separate front-end and F&I rates and the actual bases. Two 2.75% rates on separate gross bases are not 5.5% of their combined gross. If front gross is unknown, total manager compensation is unknown. Guarantees, tiers, caps, bonuses, draws and payroll costs can change the result. Until the pay plan supports a reduction, credit no commission-expense relief.
The calculator uses one commissionable F&I pool for both roles, with an optional FSM deduction from the manager's base, and holds the rates unchanged between scenarios. Confirm that both plans fit that pool. If they exclude different products or income, or the rates change, calculate each eligible base and pay state separately.
Adjust FSM and sales-manager rates in the calculator3. Check whether the replacement can actually close the gap
Use the separate workings below for additional contracts, eligible demand, delivery capacity and ramp timing. The linked calculator tests the entered baseline volume and retained share, which cannot exceed 100%; it can test a change in gross per contract but does not calculate additional sales or a cash schedule.
Continue the before-FSM example above. Choose an additional product contract earning $500 gross, with 20% FSM and 2.75% manager commissions. Its incremental contribution is $500 − $100 − $13.75 = $386.25, before any other incremental expense.
Recovering the $77,250 contribution reduction requires $77,250 ÷ $386.25 = 200 additional contracts. That division tells you what is required; it does not establish that those sales are possible.
| Input | Example | Evidence to use at your store |
|---|---|---|
| Eligible annual deals | 600 | Deals eligible for this exact product |
| Existing contracts | 120 | Current sales within those eligible deals |
| Candidate penetration ceiling | 60% | Supported customer demand, not an assumed target |
| Capacity for additional contracts | 150 | Staff, provider and delivery constraints in the period |
Available additional contracts = min(240, 150) = 150
Contribution recovered = 150 × $386.25 = $57,937.50
Remaining contribution gap = $77,250 − $57,937.50 = $19,312.50
The required lift is 200 ÷ 600 = 33.33 percentage points of eligible deals. Capacity permits 150 ÷ 600 = 25 points. This candidate does not restore the contribution, even though its selected customer headroom appears sufficient.
Add launch cost: with a further assumed $10,000 operating expense in this period, the required contribution is $87,250. Round $87,250 ÷ $386.25 up to 226 contracts. With capacity still at 150, the remaining gap is $29,312.50. The launch expense is counted once.
Subtract overlap and sales displaced from other products. A ceiling below current penetration gives zero headroom. Zero eligible deals or zero or negative incremental contribution gives no usable replacement solution. If commissions are tiered or guaranteed, recompute the whole pay plan at each volume instead of using a constant contribution per contract.
4. Keep cash release and profit improvement in separate columns
Selected inputs: a $100,000 receivable already recognized in the accounts is collected ten days earlier. That releases $100,000 of cash. It does not create $100,000 of new profit.
The 12% borrowing rate is hypothetical. The interest credit applies only if the cash actually reduces borrowing. Use the facility's actual rate, day-count basis and terms. With no borrowing reduction, credit no interest saving.
Maintain a weekly cash schedule for receipts, refunds, chargebacks, payroll, setup spend, capital expenditure and borrowing. Keep operating costs and capital purchases in their proper lines; reconcile their different effects on profit and cash.
5. Evidence, rounding and the limits of the example
For your baseline, use monthly statements, product sales and refunds, provider remittances and actual pay plans. For a response, obtain the exact contract, provider quote, supported distribution path, customer-demand evidence, capacity and launch costs. Keep customer and employee records in your authorized systems; this page does not collect them.
Calculate money in cents. For these examples, round each commission line to cents, half up; an after-FSM manager base uses the rounded FSM deduction. For an actual dealer, apply its contractual rounding. Sum rounded pay lines, then derive contribution by subtraction. Round required contract counts up and capacity down. The displayed 33.33-point lift is rounded from one-third of eligible deals.
Annual inputs are used throughout the compensation and replacement examples. A monthly run rate multiplied by twelve is not a seasonal forecast. Use separate monthly patterns for auto and RV, and account for launch timing before calling an annual replacement achievable.
The arithmetic is conditional on the selected inputs. Actual sales response, compliance cost, product eligibility, payroll relief and recovery remain unverified for your dealership. No savings, regulatory approval or lender outcome is promised. Obtain advice on your own contracts, licensing and employment obligations before implementing changes.
Primary sources
Check the authority behind the plan.
Reviewed September 12, 2026. Enacted regulation, published guidance and draft rules have different legal status. Check for updates before acting.
- B.C. Reg. 245/2025: effective date, section 4 motor-dealer classes and licence limits; section 7 conditional transition. This is not a universal grace period.
- Insurance Council: Getting a Restricted Insurance Agency Licence: proposed programme and application information.
- Council draft rules, February 26, 2026, Rule 7(25)(g): proposed compensation disclosure trigger, printed page 28. Qualifying direct and indirect compensation or benefits must be considered; accounting gross alone is not a legal disclosure test.