Independent Guide, Trusted Partner

Risk Management: Employee Retirement Plans

January 23rd, 2015

Risk ManagementCastle Rock jumps through hoops to be among the best investment advisors. Not every investment advisor goes through the same rigorous training because these hoops are not legally required. We do not think that making best practices a legal requirement will diminish our status as one of the best firms around, but we do think that selecting an investment advisor should be less risky for Plan Sponsors.

You are supposed to be careful of sales pitches that avoid using the term “fiduciary” but stress “education” instead, because those are not interchangeable services. The difference between these services would be like exchanging accounting for bookkeeping services, or medicine with surgery, or heads with tails in a coin toss. Providing education does not negate a need for a fiduciary; rather, a fiduciary investment advisor should be around for cases where education does not meet the plan’s needs, and an expert opinion is necessary.

How confident are we that Castle Rock is the place to turn? We are the best retirement investment advisor around. You can check our About Us section to be sure, or better yet Contact Us.

Our qualifications exceed all of these expectations, but you may want to check to see if your own advisor is able to eliminate some of the risks to you as a plan sponsor[1]:

  1. At least 50% of assets under management in qualified retirement plans (ours are 99%);
  2. Has an Accredited Investment Fiduciary™ or similar designation;
  3. SEC Registered Investment Advisor (RIA);
  4. Make sure your advisor has been working in the industry for at least a decade;
  5. Get a fee agreement that clearly states how the fees will be charged; and
  6. Make sure that fiduciary status is in writing.

To show your support for conflict-free advice in all retirement plans, please sign the petition here at:


Michele L. Suriano, Accredited Investment Fiduciary™, is president of Castle Rock Investment Company, a woman-owned SEC registered investment advisory firm serving qualified retirement plans.

What’s Going On?

January 22nd, 2015
Source: Bloomberg

Source: Bloomberg

A fiduciary duty, the obligation to uphold the clients’ interest above all else, is Phyllis Borzi’s long sought and tunneled for goal that we at Castle Rock uphold and agree whole-heartedly with. Together, our standards are the highest in the retirement industry. She says that, like in the movie Groundhog Day, bad policies keep being relived over and over. We want to stop the origin of the problem: the poor incentive structure.

Her aim is to make incentives to advisors as straightforward as possible in retirement plans so that the resulting fees will not surprise retirees and leave them with less than they planned.

When investment advisors do not sign up to be fiduciaries to the plans they advise, it leads to corruption and changes the fee structures of these plans so that the retirees no longer have the same security after 65 (typical retirement age). Liability to the Plan Sponsor also changes, and the integrity of the investment advisor themselves is challenged as well.

One example of how the Plan Sponsors are hung out to dry is the John Hancock case, where unreasonable fees were not seen as criminal because of this legal loophole.

Sign your support for reform here at!


Michele L. Suriano, Accredited Investment Fiduciary™, is president of Castle Rock Investment Company, a woman-owned SEC registered investment advisory firm serving qualified retirement plans.

Are you In or Out?

January 21st, 2015

What sense does it make to pay for investment advice that comes from someone who is putting his or her interests before yours?

The Department of Labor, through Phyllis Borzi, is fighting to make sure that a loophole allowing conflicted advice to retirement plans is closed. As of last week, an online petition was started by consumer groups and retirement industry giants, including AARP, at The petition is to tell Washington to stand up to Wall Street and close the loophole.

We at Castle Rock are proud to endorse this petition.

The low returns that people often find in their 401(k) or IRA accounts are due to fees that are either hidden or “bundled” so that you need hire a detective to figure out who is getting paid and how much. Please do your homework when you look for an advisor for your retirement plan. In America, today, folks can pay for advice that is in conflict with their best interests and there is no law against it.

We are proud to put our clients’ interest first and maintain our independence from compromised business practices. If you support our work and want conflict-free investment advice to be the law of the land, please sign the petition at

Are you in or out? Will you join the fight for qualified retirement investment advice?


Michele L. Suriano, Accredited Investment Fiduciary™, is president of Castle Rock Investment Company, a woman-owned SEC registered investment advisory firm serving qualified retirement plans.

Water Cooler Wisdom: Fourth Quarter 2014

January 7th, 2015

Water Cooler WisdomMajor events at the close of 2014, specifically the fourth quarter of 2014, included: the abnormally low prices of oil; the unique position of the Federal Reserve and the US dollar; US Treasury Rates poised (still) to rise; and American manufacturing ramped up to march on ahead of other world leaders, while an embroiled Europe awaits the coming year.

Returns and Valuations by Style

Significantly improved from the previous quarter, overall market growth was strong in the final quarter of 2014; though the annual return was less than half of the growth from 2013’s phenomenal success.

Energy Price Impacts

By a landslide, the most compelling story of the closing chapter of 2014 was the low oil prices brought upon by OPEC with ferocious Saudi leadership striving to re-establish control of global oil markets. Oil production outpaced consumption, therefore supply outpaced demand, and led to a build in inventories. The supply is not uniformly distributed, though, and the United States is responsible for the fastest supply growth since 2013; however, consumption in the US did not grow nearly as much, and China continues to contribute to the most global demand growth. Notably, Europe and Japan’s consumption declined.

The population most effected by gasoline prices, of course, is the lowest quintile of the population. If oil production declines, and global demand growth picks up, then oil prices could move higher, but if the demand trends persist, and supply growth remains robust with neither the US nor OPEC yielding any production, then oil prices could move further down. Economists overall are split either way, but most agree that the current low prices are abnormal. The Federal Reserve expects that any resulting deflationary pressure from current low oil market prices will be transitory, rather than permanent, and that the economy will achieve the 2% target inflation over time.

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In-plan Roth Rollovers: the latest topic

December 3rd, 2014

Get out your red pen, folks: serious revisions to the rollover options for your plan. Today we’re looking at how you will need to revise your Plan Document in order to offer in-plan Roth rollovers and a few highlights.

In-plan Roth rollovers of otherwise non-distributable amounts are treated as eligible rollovers, meaning that no withholding applies. Since this amount is not distributable, no part of the rollover may be withheld for voluntary withholding. An employee making an in-plan Roth rollover may need to increase his or her withholding or make estimated tax payments to avoid an underpayment penalty. Concerning the rollover process, here is a critical section to know from IRS Notice 2014-74:


If you do a rollover to a designated Roth account in the Plan

You cannot roll over a distribution to a designated Roth account in another employer’s plan. However, you can roll the distribution over into a designated Roth account in the distributing Plan. If you roll over a payment from the Plan to a designated Roth account in the Plan, the amount of the payment rolled over (reduced by any after-tax amounts directly rolled over) will be taxed. However, the 10% additional tax on early distributions will not apply (unless you take the amount rolled over out of the designated Roth account within the 5-year period that begins on January 1 of the year of the rollover).

If you roll over the payment to a designated Roth account in the Plan, later payments from the designated Roth account that are qualified distributions will not be taxed (including earnings after the rollover)…

Remember, if you’re making revisions to your Plan Document, then Best Practices direct you to get an ERISA attorney, and make sure you’re fulfilling your fiduciary responsibility.


Katherine Brown is a Research Associate at Castle Rock Investment Company with a Master’s degree in Global Finance, Trade, and Economic Integration from the University of Denver. She can be reached at

Water Cooler Wisdom

October 13th, 2014

Water Cooler Wisdom

September 30, 2014

Nothing is private anymore: celebrity photos are leaked across the Internet, everyone knows that Ben Bernanke was unable to refinance his mortgage and we can even follow professional football players’ misconduct. This technology, which allows us to follow the economy more closely than ever, shows that our economy is growing. Over the last quarter, the economy grew 4.6% and it is poised to continue this growth in the long run.

Here is what we expect: the US economy will continue to grow in the short and long term, interest rates will eventually rise (which is a good thing!), and you will be able to manage your money more effectively in a stable U.S. economy.

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Sometimes life isn’t fair…for a fiduciary.

October 8th, 2014


Sometimes the law isn’t fair.

But sometimes, it seems unfair because you don’t know the rules.

In the recent case of Santomenno v. John Hancock, poor understanding led plan sponsors to agree to terms that led to excessive fees charged by the service provider to the plan. Either the plan sponsors were unaware of what they signed up for, or the service provider duped them. On September 26, 2014, the Third Circuit Court of Appeals affirmed the District Court’s decision to grant John Hancock’s motion to dismiss, ruling that John Hancock was not a fiduciary – therefore, it was not required to watch out for imprudent or disloyal activities such as excessive fees.

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Coming Up: Recently Announced Money Market Reform

August 22nd, 2014

Friday, August 15, Michele Suriano (President of Castle Rock Investment Company) and I spoke with an industry insider and expert about the recently adopted SEC money market funds reforms. We covered the following key subjects:

  • Floating Net Asset Value
  • Redemption fees (discretionary and default)
  • Discretionary redemption restrictions
  • Disclosures to retirement plan participants
  • Definition of “retail” MMFs

Look for our blog post Tuesday about the reforms.

Do you have questions about what the “key subjects” even mean? Are you an expert with your own opinion about these reforms? Reach out to me at! We look forward to sharing more with you.

— Katherine Brown, Research Associate at Castle Rock Investment Company

Water Cooler Wisdom

July 26th, 2014

By: Katherine Brown, Research Associate, Castle Rock Investment Company

Water Cooler WisdomThe end of the 2nd quarter of 2014 left the global banking sector bracing from the fallout of a weak quarter. In moments of weak growth, we are reminded of the need to diversify our portfolios. Just as it is important to eat a balanced meal, it is important to balance your investment plate.

The US economy grew only 2.9% during the second quarter, which was a result of costly weather conditions, negative global trade relationships, and state and local government spending habits (often due to the extreme weather conditions). An investment portfolio is challenged – but not inherently devastated – by this kind of quarterly strife. For our purposes, more reliable data come from cyclical indicators because they provide more dependable data on economic behavior and trajectory. Capital spending, consumer confidence, orders vs. inventory and PMI indices all indicate good conditions for the economy to pick up. In other words, our markets are doing well, despite the special difficulty in the second quarter.

The Federal Reserve reoriented its goals to respond to the significant gain in jobs this past quarter. Unemployment, which reached 6.1%, is ever-nearing the long-run full employment waterline of 5.4%. While we should expect that economic growth is consistent with unemployment, if we push past full employment at 5.4%, we could face inflation. Instead, the government will work to improve total factor productivity in addition to the labor market’s full employment. This means more capital equipment and greater output per worker.

Since we have already attained 6.1% unemployment, the unemployment goal for 2014, the Fed downgraded the growth forecast for the next year to 2.2% from 3%. The comparison between Inflation and Core Inflation indicates pressures for wage growth and an increase in rental cost that creates a condition where a shift in policy will be necessary. Core inflation is at 1.95%, while bond yields are 0.6%. The economy is tightening and inflation is rising, so long-term rates should go up.

Concerns in the bond market are that Owners of US Treasury Bonds are not as concerned with the pricing of bonds as natural actors would be in an unimpeded market. The Federal Reserve adjusts investments in the bond market monthly through Quantitative Easing (QE2), which is anticipated to end in October 2014. The tapering out of Fed bond purchases means that bond rates will go up. Other distortions in the market will be due to major investors such as the Bank of Japan, which maintains excessive bond holdings that can destabilize the market should it sell off a significant amount. However, these behaviors are unlikely because of the impact it would have on their own economies, not to mention on diplomatic relations.

The bond market is a good place to invest as a defensive structure since a sharp rise in bond yields is unlikely in the future. Quantitative Easing is designed by the Fed to keep bond rates low for the long term, approximately 2% interest rate goals for this coming year. The bond market should be a reliable part of your portfolio this year, but as the economy grows, the equities market will likely exceed bond market growth.

The equities market has the best potential for year-to-year growth, despite holding the greatest risk to investors. The returns and valuations by style indicate the year-to-year earnings remain strong. The fourth quarter has the greatest potential to be the strongest of all this year. Overall recovery from 2009 market lows indicate continued recovery as the expanding data available to research stable market activity show greater returns, but do not indicate bubbles similar to the boom and bust of the last recession.

The rise in interest rates and confidence show that both should rise even further over the next 12 – 18 months, although cyclical sectors are best offset by investment in 10-year treasury bonds as a stabilizing measure to varying performance in equity markets.

Other economies spent the last quarter dealing with their own problems. In a unique twist, the EU’s growth was softened by France’s macroeconomic strife, while the European periphery provided the hopeful signs for growth. China picked up market growth after a rough first quarter, as Japan similarly indicated recovery from the sales tax increase, though neither will likely overcome the first quarter’s poor growth unscathed.

As we approach full employment, traditional investment strategies generally begin to hedge against inflation by including investments in commodities and real estate where GDP growth is perceived to be less influential than in other sectors. Quantitative Easing provides some “carbohydrates” to the US economy, thus allowing bond and equity markets to both grow in the short run. However, this promise is impermanent and may lead to trouble ahead. For a balanced meal, we turn to the foreign bond and equity markets. Thus, we foresee that the most robust investment palette will diversify not only across markets, between American equities and bonds, but across borders to take advantage of equities and bonds abroad.

Katherine Brown completed a Master’s degree in Global Finance, Trade, and Economic Integration from the University of Denver. Her research and writing focus on international monetary economics and central banking. She can be reached at

Life Lessons: the Fable of Argentina and the Used Car

July 18th, 2014

By: Katherine Brown, Research Associate, Castle Rock Investment Company

“Best is the enemy of better,” Dad reminded me patiently, as I visited the sixth used car in two days.

It sure is: my carless condition went on for about three weeks. All the while, I toiled over used car data while bumming rides off of my friends and attempting to find the perfect car within the perfect budget. Unfortunately, a used car in perfect condition does not exist for under $10,000 – at least by the time I needed to commute to my new job at Castle Rock Investment Company.

My experience reminded me of Argentina, which cannot get out of its debt negotiations within a reasonable amount of time. The country is at risk of further serious consequences to its national well-being, and further strained relationships with significant financial partners. The comparison between one young woman’s attempt to purchase a car and a nation’s attempt to alleviate $100 billion worth of legacy debt defaults is clumsy, at best, but hasn’t Argentina stalled for years to repay the now twice-adjusted default?

A sovereign debt crisis looms if this issue is not resolved. Amid recession, dwindling supplies of foreign reserves and the highest inflation rate in the world, Argentina chokes and puffs toward the goal: one more timeout. At the moment, coupon payments to bondholders are due July 30. The total first payment due amounts to $907 million. And where is that going to come from?

The US is central to the Argentine sovereign debt crisis and even appears to be more involved than the Argentine government itself. The minister of economy and public finance, Axel Kicillof, is not attending the latest meetings to restructure Argentina’s debt to Aurelius Capital Management LP and Elliot Management Corporation. Argentina may default for the second time in 13 years on its debt, previously amid $100 billion in debt in 2001. US Judge Greisa’s 2012 ruling bans Argentina from using the US financial system should it fail to meet its deadline. Perhaps further communication would be useful to avoid this significant economic threat?

Perhaps, after 2.5 years of further appeals, Argentina should realize that delaying negotiations is not likely to significantly improve the country’s chance of a better economic situation. The shadow of doubt is lengthening at the twilight of Argentina’s latest extension.

While many sympathize with the Argentine government’s unfavorable position, further delays are improbable – especially with poor communication between the debtors and indebted. In order to identify a desirable outcome, Argentina should attend the mediating process to find the “better” at the table rather than continuously press for the “best” with a megaphone outside.

NB: My dream car is, alas, still at large; however, I do possess my own set of wheels to get from point A to point B without the trials of the carless masses. Thank you, Dad, for your help in finding a good deal!

Katherine Brown completed a Master’s degree in Global Finance, Trade, and Economic Integration from the University of Denver. Her research and writing focus on international monetary economics and central banking. She can be reached at