Product Controller vs. Actuarial Analyst

[Howard Roark]

I am a student at the last year of my actuarial science and statistics program. I have an interest in investments and I'm positive that I don't want to work in a stressful FO environment so my goal is to get into risk management or ALM.

I have a few options available and I've narrowed these down to two: (1) an entry-level actuarial science student rotation program at a life firm and (2) a product controller role at a bank's fixed income derivatives division.

I know what option one entails: It should be a relatively structured route where I continue to take SOA exams (choose Investments or Finance/ERM track in the final two exams) while gaining experiences in different departments as I rotate. These different experiences should give me an understanding of the different liabilities and through networking and some luck, I should be able to get a role in ALM or risk management. I may also take the FRM after I get my FSA. It requires hard work and offers a stable career.

The second option is kind of unknown to me. I never had any internship experiences at investment banks and I met the hiring director and subsequently got the offer by chance. The director told me that besides doing PnL, I'll be doing things like independent price verifications and valuation adjustments on the trader's book and structured trade reviews on exotics - things which he said I would find interesting. But to be honest, I don't really know what these things are. From the info I could find online and from the interview, the picture I got is that I'll be taking care of a few books. For each book, I would calculate the daily PnL, verify that the trades are priced correctly by checking that the model parameters in the trader's spreadsheet are marked-to-market to a source like Bloomberg, adjust the PnL because the FO models are sometimes inadequate. But I really don't understand what adjustments I'll be making to the FO models. I don't think I would have the mathematical background. And I'm not sure what structured trade review really is?

My question is: Can someone tell me more about what product controller really do? What exactly is independent price verifications, valuation adjustments, and structured trade reviews? How does a product controller's career develop? Thanks in advance.

[mj]

Product control tends to be an area people use to get into banking, but not something people want to work in long term.

A lot of the work is pretty mundane -- making sure that the bank is assessing it's valuations correctly by benchmarking market data. The interesting part of this job can be developing new models to test the bank's models against. But not many people actually get to do that.

The main plus of the job is that you'll develop an understanding of a range of financial products that you can then leverage to do more interesting things.

[Howard Roark]

Thanks for the reply Dr. Joshi. A couple more question if I may ...

Do you know what a controller does for valuation adjustments? What kind of adjustments would I be making to the trader's valuations? I don't understand why these adjustments are not built into the trader's spreadsheet.

As for Structured Trade Reviews, it sounds like I'll be checking the trade confirmations, drawing out its cashflows, and then making sure that the trade is booked correctly in back office. Are there anything more to this?

[mj]

the first point to understand is that traders are not to be trusted. Your job would be to make sure that they aren't cooking the books.

Checking stuff has been entered properly is important but tedious...

[Howard Roark]

Thanks Dr. Joshi.

[hua052011]

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Best regards.