Product control

[Scotty]

Is product control an interesting job?  



I may have the opportunity to work with an investment bank valuing a very wide variety of interest rate and credit products for internal and external clients.  It sounds a good challenge, fun, etc.  What do people think?



Alternatively, I could have an opportunity to do the quant work for a young hedge fund that plays arb games in emerging market derivatives.



Which one... any comments welcome.

[Patrik]

Product control sounds almost like an internal audit function, one of these functions that require documentation and testing so that controllers will be happy. In that case I think you will have more fun at the other place, if you like the risk.

[Johnny]

Almost like internal audit, but not quite the same. Product control is usually part of Financial Control, the area responsible for producing and reconciling P&L statements, calculating regulatory capital, etc. A lot of product control is concerned with mark-to-market / mark-to-model policy, particularly model validation, i.e. checking that the front office models give sensible values for mark-to-model purposes. The job Scotty describes sounds like model validation. I think that this is (part of?) what mj does. It's a crucial role obviously, but it sounds v dull.

[AW]

I agree with your description of the role. Its increasingly becoming involved in mark-to-market / mark-to-model. A few things to add:



Product control is often staffed by accountants (often accountancy knowledge is put ahead of derivatives/pricing knowledge). You tend to get a lot of temps/contractors as well - (you'll also end up with more aussie and south african mates than you did before).



Rewards in product control are significantly lower than a "front-office" job. Respect is also lower within the organisation and if you are looking to move into a revenue making role this can work against you.



My recommendation would be to go with the hedge fund job, especially as its more likely to give you progression and exposure to the "best" people.

[Scotty]

Hmmm...  Thanks very much for the input.



The hedge fund role is quite 'trader-centric'.  That is, more on the instincitive end and less on the use of the techniques of mathematical finance.  As such, I expect that there will be few people with mathematical finance capabilities.  Ie I may be all alone.



The product control role will involve both price/model verification (to try to keep an eye on unusual trading activities) as well as model building and pricing for internal and external clients.  And as it is a big i-bank there will be other math/fin types around.



As I'm still learning - I feel the latter role may be better.

[tripitaka]

i guess it's quite hard to strip the hedge fund/ib out of this equation, but, as someone who has done product control in the past, i would have reservations about reccommending it to anyone with a serious interest in finance/the capacity for quant work.



in my (limited) experience, product control is populated more by accountants than it is by quant/fin types and i found that having product control on my cv did me no favours (putting it mildly) with headhunters when i came to move on.

[mj]

hmm



my job is more model review than product control. Such groups can range from the deadly dull to highly interesting. An awful lot depends on the attitude of the bank and the person running the team.



The hedge fund sounds better for building a career for a trader or a quant.

[Scotty]

Thanks mj, Tripitaka...still thinking