I’m trying to prepare for an interview for a BO position at a hedge fund. I know there are many people on this forum who either currently work in a BO or started there. I was hoping that they could give some insight as to the questions that might be asked. Any help would be appreciated.
I work in a BO for a hedge fund administrator, which is somewhat related, and I deal with alot of HF BO people at work so I can only speculate. The job they do is very similar to what I do I guess. They will likely try to guage your level of knowledge with hedge funds themeselves (the types, the strategies, regulatory stuff, currenet events in the industry etc.), the exotic products they trade (ie OTC, swaps, CDS’ etc.) and your general level of accounting knowledge (ie accruals, expenses all that crap). Probably quite a bit your self character in terms of your flexibility with working long hours, ability to work independently, innovate etc. Hope this helps. I’m considering jumping to a HF BO myself if I can, I want to work FO at some point, but working BO at an admin company is really really bad.
Stress on your attention to details
Demonstrate you know Excel/Access if possible. These help with automation which helps a ton in this position.
those are good points as well. Attention to detail is key in fund accounting. I was poor at this when I began, now I’m extremely anal.
This is my first post ever on this forum. Everyone here seems helpful and very knowledgable. I currently work in the BO for an investment management firm. I agree with what everyone said above. Attention to detail is important and I would also stress your organizational skills. Excel is also very important. Most candidates will say they are great with excel but really don’t know much at all. The people who management love in the BO are the ones who can handle all the production work thrown at them as well as take a role in projects such as automating various processes. They will most likely ask you if you have any experience working on such projects and working in teams. If you can cite a specific example of how you added value to a process in the past they will love you.
I have 5 years experience as an actuarial analyst for a large consulting firm. I am confident in my excel skills, organizational skills, etc. I am not confident in my industry knowledge (mentioned by CFA_Halifax above). I am applying for entry-level positions. What level of knowledge would these companies be expecting? My education was math and econ. I would imagine with my background and the turn over in these types of positions I should be okay.
i agree with all the above… i had an interview last year for a more FO role at a hedge fund… i made it to 3 interviews, and one thing they guage is your willingness to work the long hours… your academic transcript is another big thing they looked at… plus they tested me on the spot with their ‘weird’ derivatives/products… make sure you know the gist of what their funds do… and be prepared to price derivatives, talk about their levels of risk, etc etc… in my final interview they gave me a sheet with some numbers, bond prices, conrtract sizes, etc and asked me how to price (conceptually) this product, the leverage obtained, etc etc… in terms of you applying for a BO role, i used to work in citibank’s settlement area… when i did taht interview, they seemed concerned with the fact that i may get bored in that work, so have a good reason as to why you want to work in the BO (and DONT say you want to use it to get you into the FO) cos they tend to see those as two separate things…either you want BO or FO… my agent even told me, they were going to ask me a trick question “Do you want to work in FO?” which i was told to reply “NO” otherwise i wouldnt get the job hope taht helps
actanalyst Wrote: ------------------------------------------------------- > I have 5 years experience as an actuarial analyst > for a large consulting firm. I am confident in my > excel skills, organizational skills, etc. I am > not confident in my industry knowledge (mentioned > by CFA_Halifax above). I am applying for > entry-level positions. What level of knowledge > would these companies be expecting? My education > was math and econ. I would imagine with my > background and the turn over in these types of > positions I should be okay. Definetly. You don’t need to have extensive product knowledge, just have an idea so as not to look like a tool with co-workers and clients (ie 'what’s a swap!"). With your exp you’ll be more than fine
actanalyst Wrote: ------------------------------------------------------- > I have 5 years experience as an actuarial analyst > for a large consulting firm. I am confident in my > excel skills, organizational skills, etc. I am > not confident in my industry knowledge (mentioned > by CFA_Halifax above). I am applying for > entry-level positions. What level of knowledge > would these companies be expecting? My education > was math and econ. I would imagine with my > background and the turn over in these types of > positions I should be okay. You might be a little over qualified for a BO position. How many actuarial exams have you passed? I know that being an actuary isnt exactly action-packed, but doing cash recons and settlements all day isn’t either. and you will most definitely be taking a pay cut (probably a huge pay cut). plus its possible to get a FO position… dont sell yourself short. if i were you, instead of working in the BO of a hedge fund, i would check out mutual fund companies with target-date funds (or some other DB-ish fund, pensions if you can find any these days). i was an actuarial math major and i decided i wanted to work in the exciting world of finance. took a BO job and well… boo that decision.
This also involves a move. Between dumping my house and my wife making considerably more at her new job, I can absorb a pay cut. Besides, based on the numbers the head hunters I am working with have thrown out, it won’t be much of a cut. I don’t know… I think down the road, I’d rather be a CFO or COO of a HF than in a FO position. I just hope I can convince someone to give me a shot.
IF you are at a good hedge fund, there will be a pay increase. Additionally, the more targeted your skills are for a BO position, the more you will make.
actanalyst, what’s the reason that you are giving up on the actuarial profession after being there for 5 years? I can imagine that, a FSA in consulting, with 5 years of experience in a city like NYC or Boston, can be easily making 120-180k. I don’t think a BO position in a hedge fund can be as good in terms of salary. I am a consulting actuary myself, and my friends working in the BO of Goldman and other major hedge funds think I have a better job than them. What’s your reason for this career change?
I might feel differently if I was a life actuary. Unfortunately, I am an analyst for a P&C consulting practice. A life of chasing down data, modeling loss reserves, and explaining results just doesn’t appeal to me. I know the first 5+ years as an operations analyst will be mundane. But, hopefully I’ll be able to move up to a controller or CFO role. With the right company, I think it will be a rewarding career - in all respects.
what does appeal to you? Have you taken any CFA exams? How many actuarial exams have you passed? Are you too far along in the CAS exams to switch over to the SOA exams? I’m getting the feeling that you don’t know what you are getting into. Its tough when you dont have any experience in finance to know what the “good” jobs are and how to navigate the field. I dont work at a HF and there are much more qualified people on this board that could give you advice, but I don’t think working 5 yrs as an ops analyst in the BO is enough to move you into a CFO role. most people (that i have seen) who have been in BO for 5 years, get stuck there. There is a reason that so many people in BO take the CFA exams in an effort to escape the BO. And anyhow, i imagine most CFOs (at hedge funds) have some sort of FO experience. any HFers want to verify if that is actually true? if you dont like chasing down data, modeling and explaining results, then probably research is not the career path for you. if you are looking for something $exy and exciting, maybe you could be a trader, but that is a tough gig to get. BO tends to be a lot more data entry and a lot less analytical (thats a generality). alright. enough from me. you’ll do what you want to do. just be careful what you wish for.
A HF BO is a different beast. If you’re at small company <10 employees, you’re essentially an utility player. Yes, you’ll be putting together office furniture and entering data, but you’ll also be getting exposure to many other aspects of the business that you wouldn’t at a larger HF, investment bank, etc. I’m not saying I’ll start out here. Recruiters are pointing me toward the larger HFs that have the time to train me. But in 2-3 years, who knows. And a few years after that, I don’t see why controller or CFO would be out of the question.
I am sure as a P/C consultant, you get exposed to more than just mere data chasing and modeling loss reserves. Enterprise risk management has been a popular area for P/C actuaries these years. Also, if you are tired of the kind of life in consulting, why didn’t you switch over to an insurance company and try that for a couple of years? Actuary to CFO is also a possibility, and it actually just happened to one of the guys that used to work with me. But after all, rising to CFO may not really be that easy. Also, I don’t see how looking at accounting numbers can be more exciting than looking at reserve data?
I interviewed at a HF for a BO position a year or two ago. I wanted to have better access to the FO and more exposure to derivatives. I interviewed with the CFO and she was really great and told me that she wished she had a position for me, but I was too ambitious for this particular one. They wanted someone to come in and revamp their BO operations. Set up policies and procedures, automation etc and stick around for a while… aka. i could move up w/in ops, but I wouldnt be moving anywhere else w/in the company. Don’t get me wrong. Not every HF is the same… just be very clear what your goals are when you are interviewing. Its easy to get stuck in Ops. I’m not saying you shouldn’t move from the actuarial world to finance. I’m just saying to skip the BO step if you can (and i think you if you look for the right job you can). Why start at step one with a bunch of 19 yr olds when you can start a few steps ahead with people that have as much experience as you do? Another thought related to pennyless’s post. perhaps you could move to an insurance company on the investment side? That would give you more relevent experience and then you could easily jump ship and move to a HF. You’ll probably have more personal time at an insurance company and could even take a CFA exam or two (i know how actuaries love to take exams!).
Nolabird, when you talk about an insurance company on the investment side can you clarify this please. I am interested in getting into hedge funds and I have a quantitative background (eng/math) as well.
donski212, a quick google search can get you the answer. When insurance companies collect so much money in premiums, what do they do with it? Some of them are placed in a reserve to pay next year’s claims, and some are invested to pay future claims and meet other liabilities. Almost all insurance companies have their investment management arm. Here’s a description on NY Life Investment Management’s website of its equity division: “NYLIM Equity Investors consists of four highly experienced quantitative investment teams organized by style (core, growth, value, and international) which are supported by deep firm-wide resources. The firm manages over $16 billion in quantitative strategies including Long-Only Equity, 130/30, and Market Neutral Hedge Funds. Each investment team employs models and processes that are unique to each product. The models have proven quantitative alpha forecasting engines that position the teams to capitalize on positive as well as negative forecasts. A dedicated research team focuses on continuously reevaluating the validity of existing models and factor families as well as seeking potential enhancements. Risk is managed relative to the respective benchmarks using Barra’s risk model and optimizer. Transaction costs are minimized by implementing disciplined and sophisticated trading strategies. New York Life Capital Partners (NYLCAP) is a premier manager of private equity, including fund investments, equity coinvestments, and mezzanine investments. They have a long-standing track record dating back to 1984 and a team that has worked together for over 15 years. Their Core Partner relationships have strengthened through an active management approach that includes participating on advisory boards and co-investing with sponsors. NYLCAP’s strategy also creates high-quality, proprietary deal flow for its managed co-investment and mezzanine funds.” Link: http://www.nylim.com/ I have met a few investment actuaries from NY Life with ASA/FSA and CFA when they came to my school. They also have a very attractive compensation package I believe.