by Nicolas Doumenc Comments (33)

Breaking Into Investment Funds in Eastern Europe: How to Get Screwed on Your Bonus and Then Leave for Ethical Reasons

Nicolas is the founder of 300 Finance Gurus and has advised more than 100 clients on their cover letters and resumes. He also provides strategies on networking, LinkedIn and interview preparation for clients in Investment Banking, Corporate Finance and Private Equity (full bio at the bottom of this article.)

Eastern Europe Investment Funds

Ah, Eastern Europe.

Just hearing about the region might suddenly give you visions of super-cheap, capitalism-friendly countries where finance is still a booming industry and the place to be.

But the actual story – from recruiting to bonuses to deals to exit opportunities – is very different from what you’ve read about in the news.

You’ve already heard from a reader who studied and worked in Poland and then moved to London – so this time around we’ll speak with someone who did the opposite and decided to stay in his home country.

Here’s what you’ll learn:

  • Just how easy – or difficult? – it is to get hired in Eastern Europe.
  • What the finance industry is like in Eastern Europe and how deals and technical work differ.
  • Why you might get screwed on your bonus, especially if you work at a less-than-ethical fund.
  • How smaller firms there think about compensation, work hours, and client service “differently.”

In the Beginning…

Q: I know everyone’s curious about what finance is like in Eastern Europe – but before we dive into the subject, can you tell us how you became interested in the industry? What’s your story?

A: During my studies in Economics, I took finance courses but focused more on the trading side. I found that really interesting because I’ve always been into math.

My teachers told me that I was really good at it and that I could use my skills to move into finance and perform well there – so that was the first “spark.”

Spark #2 was a little more specific and related to the most difficult course I had, where I fell in love with the “be the best” attitude that people in finance like to claim they have.

Q: That’s a horrible “story” – didn’t you read the article I linked to at all? What about the beginning, your growing interest, and your future goals?

A: What can I say? Recruiting standards aren’t quite as high in Eastern Europe.

Plus, you wanted the condensed version of how I got interested in finance, right?

Q: Ok, fair enough. We’ll skip over that for now.

You just said recruiting standards are “lower,” but is that really true? How did you break into the industry, and how is recruiting different from the US and Western Europe?

A: One investment fund was recruiting at a career fair, so I just walked up and told the outline of my story – that I like the competition, the challenge, and the money, and that I got interested initially via finance classes.

We connected because their business was all about “outsmarting other people” – so I went for an interview the following week and received an offer right after that.

Recruiting in Eastern Europe is really different because the world of finance isn’t mature yet – here, as long as you come from a good university with good credentials you can just go to a finance firm and line up an entry-level position by asking about it.

M&I Note: This approach would not work in most places. Occasionally you’ll meet prop trading firms or hedge funds that like variants of the “greed is good” mentality, but otherwise you should stay away from it in developed markets.

East vs. West

Q: That’s quite a Cinderella story you have there – I just hope no one reading gets their hopes up and assumes it will be that easy for them.

Besides the recruiting process being something of a joke, how does the finance industry differ in Eastern Europe vs. the US and Western Europe?

A: The biggest difference is that in Eastern Europe it’s really hard to value assets. The market is so illiquid that it’s impossible to know the real value even if the assets trade in the public markets – so you can see the implications when you work at an investment fund or PE firm.

Turnover is also extremely high here. If you think it’s high in the US or Western Europe, you’ve seen nothing until you’ve worked in emerging markets. Whether you’re at an investment bank, an investment fund, or anything in between, it’s “up or out” in less than 2 years, and sometimes less than 1 year.

You see the same aggressive promotion structure / hierarchy elsewhere, but it’s even more pronounced here.

Q: So how does your firm fit into the picture? What do you, and how do you make money?

A: I used to work for an investment fund that traded “off-exchange” instruments such as private debt, junk bonds or really risky equity investments.

So it didn’t fall into a neatly defined category like hedge funds, private equity, mezzanine funds, and so on – I suppose it was closest to a hedge fund, but it was a fund that traded a wide variety of securities and employed many different strategies.

I always thought that the firm’s slogan should have been “Tricky stuff in a tricky country”.

If you remember what I said earlier, one of the big problems in Eastern Europe is that the market is illiquid. If you add Over-the-Counter and risky products to the mix as well, you have a recipe for disaster.

There are a lot of firms like mine in Eastern Europe, but they mostly focus on low and mid cap deals. The biggest deals and investments here are handled by Scandinavian or London-based banks.

Q: You just said you “used to” work for an investment fund there – I assume things didn’t go well and you left?

A: Oh, that’s a whole separate story. Just keep asking me questions and we’ll get there eventually.

Q: Ok, we’ll get there in a bit…

What about the Excel models and technical work in your former job? Were they simplified over what you’d find in a developed country since valuation is so hard to determine?

A: I created some complex IB-style models, but to illustrate how modeling and technical work is different in Eastern Europe, let me tell you a story…

My firm made an equity investment in a business that had severe short-term difficulties, but which might have turned out well in the long-term.

I started building a valuation model to be used in our NAV (Net Asset Value) calculation – in the model you could tweak hundreds of tiny details and make slight changes that might justify a value of 100 but also a value of 50 or a value of 200.

After a while, I went to see my boss and asked him directly, “What valuation do you want to see here?”

He told me he wanted to see a value just above the one I had. So I just went back to my model, changed a few assumption and I was done – models are used more to justify what people already think than to determine the valuation in the first place.

M&I Note: You still see this type of behavior all the time even in the developed world – MDs usually have an idea of what a company is worth. Valuation often has nothing to do with picking the right set of comps or setting up your DCF correctly, but rather justifying the MD’s foregone conclusion.

Pay, Hours, Culture, and… Ethics? What?

Q: What about the typical work hours? Are they better or worse than the average IB/PE job?

A: It depends on who you’re speaking with – the Partners barely did any work at the office because wining and dining client is done elsewhere. They often came in at 11 AM, checked their email, went to lunch with clients, and then left at 7 or 8 PM.

But for me it was more like 60 – 70 hour workweeks. That may not sound bad compared to the usual investment banking hours, but there was so much nonsense in this job that I could barely put up with it.

At first, I was excited about everything I was learning and thought that I was a finance hot-shot because I was creating presentations and models – but I soon realized that most of my work was useless.

You could argue that a lot of the work you do in IB in developed markets is also useless – but at least valuation work there has some relevance and figuring out what a company is worth isn’t 100% guesswork.

So, taking the advice on how to succeed by slacking off and not doing work seriously, I started to spend a day or more on a model that would only take me 2 – 3 hours.

That wouldn’t have worked in London or NY, but here the senior “professionals” didn’t really care . So I spent 70 hours per week pretending to be doing something really important, when in reality I was planning my exit opportunities most of that time.

Q: That’s a good trick if you got paid to plan your exit options instead.

 Speaking of pay, how much did they pay you to polish your resume and pretend to focus the whole time?

A: As a first year “analyst,” I made $10,000 USD and as a 3rd year analyst I made $22,000 USD. These numbers were at the very low-end of finance wages in Eastern Europe, and many of my friends were doing way better.

If you’re wondering how I survived on that amount of money, keep in mind that this is Eastern Europe: the cost of living is dramatically lower.

You still won’t live like a king on those salaries, but you can definitely get by and pay for more than just basic necessities.

Q: Point taken, but I’m still pretty shocked at how low those numbers are. Even if Eastern Europe, you couldn’t possibly have afforded bottle service every night with that kind of pay.

How did you survive, and why did you sign up in the first place?

A: I was attracted to the incentive scheme – basically, they had a profit-sharing scheme in place and everyone from analyst to MD could participate in it.

In a good year, I could have earned a $50,000 USD bonus – bad by US standards, but a great bonus when the cost of living is many times lower.

But it never happened, and my biggest bonus was only $1,500 USD at the end of my 3rd year.

Q: You got over 30 TIMES less than you expected? How is that possible? Did they just assign bonus numbers randomly?

A: Each year, they presented the “profit pool” during a meeting and claimed that 5% of it would be allocated to analysts and associates.

So in a good year, that might have been a $50,000 USD bonus for me – but they never explained who got what or how it was allocated between analysts and associates.

At first, I assumed that I had just gotten screwed and that someone else took most of the bonus for himself – but then it turned out that they didn’t give much to anyone.

The issue was that my investment fund was running into liquidity problems and they didn’t want to give a bonus to someone they were planning to lay off anyway – so they stopped trying to motivate us at this stage.

None of us ever signed any official documents establishing the rules for this profit-sharing scheme, so it was our fault as well – we should have asked for a guarantee in writing.

This type of issue is more of a problem at small funds; other friends working in finance in Eastern Europe haven’t had anything similar happen to them.

Conclusions and Future Plans?

Q: Sounds like a horrible place to work at. So what did you do in response to those poor bonuses and shady justifications?

A: By the end, I was just waiting for them to lay me off. My plan was to take up my studies again in another field, and so I left the job when school was about to start.

The bonus was important, but not just for the money – it was also symbolic. A big bonus means that they care about you and value your work.

M&I Note: I can’t really agree with the statement above since no companies really care about you. But hey, these are the words of the interviewee so I’ll leave them in…

Q: That’s the first time that I’ve ever heard that theory.

What about the ethics? I’m sure that if they treated their employees that way, they didn’t do things much differently with their clients…

A: The way they treated clients was the last straw.

At first, I thought that the firm was all about making good investments that generate money by “outsmarting other investors.”

But it wasn’t about being smart; it was just about making your clients think that you were so smart.

And given how we were calculating our NAV (see the previous example about equity valuation in this article) and the lack of regulations, it was very easy to show a very stable and high performance.

The firm just kept posting good growth, collecting more money, taking the management and success fees, and making bad investments the whole time while pretending that nothing was wrong.

Some of the Partners at the firm also had this “I have money and you don’t, so you’re beneath me” attitude that I just hated. They behaved this way with everyone, not just analysts.

In short, the firm represented everything that the general public hates about the finance industry – dishonesty, lack of transparency, and arrogance.

Not all shops in Eastern Europe operate like this, but I do think that many investment firms here attempt to look serious and professional, but in reality use less-than-ethical business practices.

I think it’s important to hear these stories, because they do happen and both employees and investors get screwed over when something like this comes up.

As a result of all of the above, it was an easy decision for me to leave the investment industry.

Q: Definitely true. You left because the firm was so unethical, but what about the standard exit opportunities? Are they different from what you see in the Western world?

A: Exit opportunities are very similar – many friends of mine went into consulting and quite a few became CFOs for small businesses here. And just as you see elsewhere in the world, you have more options when you work at a bigger firm.

But in Eastern Europe, exit opportunities are far less structured and you can also break into fields like marketing. HR departments realized that as an investment analyst, you develop skills such as performing analysis, preparing presentations and creating promotion materials to show how amazingly great your fund is.

Those skills are a perfect match for a marketing position: a lot of hot hair and nothing too technical.

Q: Awesome. Thanks a lot for sharing your story and good luck with your future plans!

A: My pleasure!

About the Author

Nicolas Doumenc is the Founder of 300 Finance Gurus, a website where he grills 300 Managing Directors, CFOs, Vice-Presidents, Associates, and headhunters on their best networking and interviewing techniques. He also offers career coaching and resume/CV editing services there.

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  1. Adrian Bulgaru

    Adrian Bulgaru say:

    I’m from Eastern Europe and I can tell you that there are business sectors that are going very well. In general there is interest from investment funds to come in Romania (my particular case, as a consultant), but it is difficult to understand how they should proceed. The yield obtained for investments, exceeding an average of 6 percent. There is much talk about Eastern Europe, but there are a lot to do, it is important to properly analyze the business plan and ask for extra collateral.

    1. Hi Adrian,

      I wasn’t saying that nothing can work in Easter Europe and that the countries are doomed. Far from that. It’s just that for people who think it’s the new eldorado and want to work in funds over there it can be tough.

    2. Mihai Iacomi

      I saw you have experience. How can i get in touch with a respectable funding/ investments company, interested in East Europe? We need a loan and we offer a milling complex industrial complex in extreme South of Romania, as guarantee.

  2. Cristina

    Very interesting article. I worked for two years for an investment firm in Eastern Europe. This firm had investments in several countries, and a bunch of local offices, with the headquarters situated in a respectable West-European country. I am absolutely astonished by the resemblance of this article with my experience. Almost everything is matching, with the exception of the salary – my pay was considerably lower than the figures presented here. I am quite skeptical about future developments in the area, and personally I moved to Western Europe 4 years ago.

    1. Hi Cristina,

      Thanks for your comment. Maybe you worked in the same firm as the person I interviewed who knows?


  3. So what new topics are gonna come up?
    Anything on France,denmark or Netherlands?

    1. You are right, I need to work on something about France!

  4. Hello!

    I’m from Hungary and I would be grateful if you could share your opinion about my situation.

    I’m studying in one of the top Hungarian universities, Master of Finance and I have investment analysis major. Between Bsc and Msc I have worked for 2 years at Deloitte as an Auditor. I have one more year until I finish. In the summer and the next education year (from sept ’til 2013 june) I am able to work in part time so I would like to apply for an internship.

    My final goal is to work for a PE/VC company and my question is, what would be the best route for me in this region? My main interest would be M&A but in the region the market is not so big and we do not have too much IB.

    I’ve already talked to Deloitte’s and PwC’s HR leader and there’s a chance that I could get an internship there at the Financial Advisory Services dpt (Deloitte) or Consultancy (PwC). Would it be a good decision for me? Or what area would be a good entry point taking into consideration that not so much IB has offices in Budapest?

    Thank you for your advices!

    1. M&I - Nicole

      Sure. How about moving to London? Is that a feasible option?

      1. In long term sure, but I definitely would like to finish the university.

        1. M&I - Nicole

          I don’t know much about Budapest, but I’d try your current leads and see which internship you get first. Go from there.

    2. IMO try to get into the FAS/TAS dept of deloitte or PWC , use that experience to move to a more mature market

  5. Well there are other problems in these countried too apart from pay.They are less ethnically diverse so xenophobia is common.If you do want to work in east europe ,Hungary is the only option which should merit cconsideration.Not only does that country have hottest women on this planet but the country is in the EU so it is fairly developed and oppurtunities are there as opposed to bulgaria,romania etc.
    And i do think American firms are way more unethical than the one talked about in the interview

    1. Hah, good points. There are some unethical firms in other regions, but that said, they do tend to be more common in places that are growing quickly because it’s easy for people to look the other way.

      1. And in Western Europe/USA, firms are unethical but in a different, less obvious way.

  6. Hey guys,

    Could you explain the difference between AM & IM please….

    1. M&I - Nicole

      AM = Asset Management = IM = Investment Management

    2. In France, we use AM & IM as synonyms. But maybe it’s different in the US…

      1. the wiki article spits out AM as IM and vice versa. I think from what I can gather is that investment management is more the institutional side, while asset management sometimes has more “wealth management” connotations.

        1. What Nicole and Nicolas said: AM = IM and IM = AM. There is no disctinction related to institutional versus wealth management. Wealth management is something entirely different.

  7. Wow. Just wow. I will never lay my eyes on those countries, ever.

    1. Well, admittedly it’s not representative of all countries and firms there. But it does happen more than you’d expect in less developed markets.

  8. I can attest to the “carry promise” was with a mid mkt. PE firm in eastern Europe for several years, and the carry was never that great- but the wages for SA’s were closer to crappy US analyst jobs, around a 85-120k Euro.

    1. Interesting to hear, wonder how it would differ at much larger PE firms there (though not sure if they’re even there in great numbers).

    2. You’re totally right.The carry was there to “trap” the analysts so they don’t complain about their wages.

  9. Hey,

    So I am interviewing for a small family investment fund (fund of fund style investing)in london next week.
    I was wondering whether starting a role out of undergrad there would potentially impede on a future investment management career at large investment managers or whether I could potentially have good access to networking and such things there, which would make moving after a year or two feasible/desirable?
    I’d also be doing the CFA, which may make a difference for AM recruiters (I know it doesn’t for IBs)?
    Sorry if these are very basic questions, I did a summer at an IB, and only now (final year undergrad) decided to move into AM/IM…

    1. M&I - Nicole

      Good access to networking

      Yes. CFA would help for AM

      1. I read the article on fund of funds investing on your site – it seems clear that it won’t be as quantitative as I hoped it would be, but from what I read it seems it is a good path to move into asset management at a big investor after a year or so.

        Thanks for your advice, really appreciate it.

    2. Yeah I think you could move to another IM or AM firm after a year or two, but would be harder to back into IB or something like that due to the lesser-known name.

      1. That’s good to hear, thanks!
        I decided after my SA position (new BB) not to pursue banking, but IM/AM (still don’t get the difference between the two) sounds pretty exciting, from what I saw.
        Your recent shift towards more investor based material couldn’t have been better timed!

  10. Hello! I am from Eastern Europe myself (Croatia) and I was wondering what specific country in Eastern Europe this article is talking about… Could you give me any more information about this?

    1. Hi pm,
      I’m really sorry but the person I interviewed still has many friends in the business and giving a specific country would make him easier to recognize.
      I’ll just say that this is a country somewhat comparable to Croatia economically.

    2. Brian (not M&I Brian)

      I am a US citizen who had a comparable experience to the interviewee while in Eastern Europe. I’d be happy to compare notes / answer specific questions on a one-on-one basis. If interested, email me at

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