A SHAKY START TO THE YEAR … FOLLOWED BY A NICE REBOUND

Frontier Wealth Management is a private wealth advisory practice that uses a team-centric approach to create comprehensive solutions tailored to our clients’ goals. With resolute focus on our Core Values, we act in our clients’ best interests to simplify complexities, maximize opportunities and create a

plan that empowers them with confidence throughout their financial journey.

TRANSPARENTClear, Open, Accountable

We are open and authentic in our approach. Our clients will always

know the what, why and how of every recommendation and

decision we make.

ADVOCATESBelievers, Supporters, Champions

We know our clients’ financial goals and personal aspirations,

and we go to the greatest lengths to make those aspirations

a reality.

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We are here to serve our clients. Our success is built upon a

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With our team-centric approach, our advisors and in-house

specialists collaborate to develop and refine a path tailored for

financial success regardless of the complexity or goals.

ON THE COVER

SPRING 2016

DEPARTMENTSON THE ECONOMIC FRONTIER: A shaky start to the year … followed by a nice rebound4

NEWS & NOTESUpdates and news from our Frontier offices

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TAX DATAInformative statistics and facts about taxes in America

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NEWS YOU CAN USEInteresting By the Numbers statistics and a breakdown of the average cost of fitness

12FEATURES

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FROM THE BENCH: SHOULD YOU PAY POINTS TO BUY DOWN YOUR MORTGAGE?Factors to help you make the right decision

DON’T BE FOOLED: IRS SCAMS CONTINUE TO POSE SERIOUS THREATSThe IRS has some advice for taxpayers that may prevent them from being the victim of a tax scam

@frontier_wealth linkedin.com/company/frontier-wealth-managementfacebook.com/frontierwealthmanagement

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4 | SPRING 2016 FRONTIER WEALTH MANAGEMENT

A ROUGH START TO THE YEARThe new year couldn’t have started off any worse

for stock market investors. The first two weeks of

January were officially the worst start to a new

year for the stock market in U.S. history. In just 10

trading days, the Dow Jones Industrial Average

plunged more than 1,100 points, or nearly 6.8

percent. Meanwhile, the S&P 500 dropped 132

points, or 6.6 percent.

This rocky start to the new year for the stock

market had many investors wringing their hands

and wondering if we were headed for another

At Frontier, we know everyone doesn’t have time to keep an eye on macroeconomic trends and gauge

how they might impact their investments. Therefore, we offer the following look at the U.S. economy

and investment markets in order to keep you informed about the most important trends that could

affect your finances and portfolio.

A SHAKY START TO THE YEAR …FOLLOWED BY A NICE REBOUND

major correction — or worse. Some investors

panicked and sold stocks, fearing that 2016 was

shaping up to be 2008-2009 all over again.

However, most investors who sat tight have

been rewarded so far. Since the dreadful start

to the year, the Dow has bounced back strong,

surpassing its Jan. 4 level by mid-March and

closing above 17,900 in mid-April. The S&P 500

has done the same and was closing in on 2,100

in mid-April — within sight of its record close of

2,128 last July.

A CONVERGENCE OF FACTORSWhat exactly caused the stock market swoon

earlier this year? Most economists point to

several key factors, including slowing worldwide

economic growth, a strong U.S. dollar, falling

commodity prices and the lingering effects of the

Fed’s December interest rate hike.

As has been the case for much of the past year,

concerns about slowing growth in China were

top of mind for many investors during the first

quarter. The world’s most populous nation and

second largest economy is in the painful process

of transitioning away from an economy centered

on manufacturing to one that’s more reliant on

services. After growing at blistering double-

digit rates for much of the past decade, China’s

economy has cooled down, growing by just 6.9

percent last year.

Low oil prices were another factor in the

stock market’s jittery first quarter performance.

CELEBRATING THE BULL MARKET’S 7TH ANNIVERSARY

Amid all the fretting

last quarter about the

stock market’s shaky

start to the year, many

people missed an important milestone: On March

9, the bull market turned 7 years old, making it the

third longest-running bull market in U.S. history.

Facts like this are important to remember when

volatility hits the stock market as it did earlier this

year. To help put this short-term volatility into

better perspective, let’s take a look at how some

things in the economy have changed over the past

seven years:

• The S&P 500 index has soared more than

three-fold — from 677 on March 9, 2009, to

2,082 in mid-April 2016.

• Real GDP growth has gone from -5.4 percent

in the first quarter of 2009 to 2.4 percent

for 2015.

• The economy has gained more than 11.5

million new jobs over the past seven years,

more than making up for the 8.7 million jobs

that were lost during the Great Recession.

• The unemployment rate has dropped from

8.7 percent in March 2009 to 5.0 percent as

of April 1.

• Consumer spending has risen by 15.9 percent

over the past seven years — from $9.8 trillion

to $11.4 trillion.

— Source: Yahoo! Finance

SPRING 2016 | 5

FRONTIER WEALTH MANAGEMENT6 | SPRING 2016

Consumers continued to pocket a little extra

cash every time they filled their tanks with

sub-$2 per gallon gas. From a broad economic

perspective, however, low oil and gas prices

aren’t such great news because they are a

reflection of slowing economic growth. So

it’s a little ironic that while drivers celebrate

historically cheap gasoline, they could be

losing far more in their investment portfolios

due to low oil prices than they’re saving at

the pump (at least in the short term).

So what’s behind these historically low

oil prices? In the simplest terms, it’s mostly a

matter of supply vs. demand. Slowing global

economic growth has reduced the worldwide

demand for oil, while oil supplies remain high.

At the end of the first quarter, oil prices had

started to stabilize somewhat as it appeared that

oil-rich nations like Saudi Arabia and Kuwait

might begin to cooperate in curbing output and

thus controlling supplies. Although prices are

likely to rise as we head into the summer driving

season, most analysts don’t expect a sharp rise

in prices anytime soon.

WHISPERING THE R WORDWhen the stock market was plunging in January,

some economists were starting to whisper the R

word, as in recession. After all, U.S. GDP grew at

just 1.4 percent in the fourth quarter of last year

and just 2.4 percent for the entire year last year,

according to the Bureau of Economic Analysis.

PEEKING AHEAD AT THE REST OF THE YEARIn early April, Kiplinger made the

following forecasts for the remainder

of 2016:

• GDP GROWTH: 2.3%, down slightly from 2.4% last year

• UNEMPLOYMENT RATE: 4.6%, down from the current 5.0%

• 10-YEAR TREASURY BOND RATE: 2.4%, up from the current 1.8%

• INFLATION RATE: 2.4%, up from 0.7% last year

• HOUSING STARTS: A 15% increase in construction of single-family homes

• RETAIL SALES: Up 3.9% this year, compared to 4.6% growth last year

• U.S. TRADE DEFICIT: Growing by 4% this year compared to a 6.2% increase last year

• 30-YEAR MORTGAGE RATE: 4.2%, up from the current 3.7%

SPRING 2016 | 7

This continued the recent trend of sub-par annual

economic growth of less than 3 percent since the

economic recovery began nearly seven years ago.

Preliminary estimates of GDP growth for the first

quarter of this year, meanwhile, are as low as

0.1 percent.

The stock market’s bounce-back has quieted

this talk for now, as have some encouraging

recent economic statistics. For example, the labor

market added a healthy 628,000 jobs during the

first quarter, while the labor force participation

rate increased and the number of discouraged

job seekers declined. Wages were also up by 2.25

percent in March (year over year) and consumer

spending increased slightly. All of these key

indicators of economic growth appeared to have

positive momentum entering the second quarter,

which could spell good news for GDP growth in

the near term.

WHAT ABOUT INTEREST RATES?As for interest rates, the big question now is

what will the Federal Reserve do next after its

0.25 percentage point increase in the federal

funds rate last December — its first rate hike

in a decade. The size of the rate hike was less

important than the fact that it signaled a shift

in the Fed’s long-term stance of keeping interest

rates at near-zero levels.

The Fed stated when it announced the rate

hike that it intends to raise rates by 1 percentage

point annually for the next three years to bring

the federal funds rate above 3 percent by 2019.

In its most recent published forecast of interest

rates, Kiplinger’s expects two more rate hikes this

year — 0.25 percentage point hikes in June and

December. This stance will indicate “caution”

by the Fed, according to Kiplinger’s, given the

“still-sluggish domestic and economic global

economic growth.”

BUCKLE UP AND HOLD ON!The start of 2016 certainly wasn’t what investors

wanted or expected. However, the bounceback

that has occurred since serves as a good

reminder of the importance of keeping a long-

term perspective when it comes to the economy

and investing.

There may be more bumps in the road

throughout the year, especially with this being a

Presidential election year. The best advice is to

buckle your seat belt, hold on tight and not let

short-term volatility affect your long-term plan.

Feel free to give us a call any time if you

have any questions or would like to discuss your

portfolio and strategies in more detail. u

All of these key indicators of economic

growth appeared to have positive momentum

entering the second quarter, which could spell good news for GDP

growth in the near term.

8 | SPRING 2016 FRONTIER WEALTH MANAGEMENT

For example, let’s assume you paid one

point (or $5,000) on a $500,000 mortgage to

reduce your interest rate from 3.5 percent to

3.25 percent. This would save you $69 a month

on a 30-year mortgage. Paying two points would

save you $138 a month. Therefore, paying points

enables a smaller monthly mortgage payment,

with less interest being paid over the life of the

loan itself.

One benefit of paying points is that lower

monthly payments could enable you to qualify for

a larger mortgage. The more points you buy, the

more you could lower your payments and possibly

buy a more expensive home.

Another benefit is the acceleration of the

mortgage interest deduction on the purchase

of a home. Points paid for a mortgage rate buy-

down are considered to be prepaid interest and

can be fully deducted during the first year of the

mortgage. Note that this benefit only applies to

new or existing home purchases, not to mortgage

refinances. When refinancing, the cost of points

must be amortized over the life of the mortgage.

By Mark Howe, CFP®

Senior Financial Planner

When you take out

a mortgage to

buy a new home,

the lender may offer you the

option of reducing your interest rate by paying

“points” upfront. This is sometimes referred to

as “buying down” your mortgage rate.

Does paying points to lower your mortgage

interest rate make sense financially? There’s not

a clear-cut answer to this question — it depends

on several different factors. The following is a

look at some of these factors to help you make

the right decision.

WHAT IS A “POINT”?In mortgage terminology, a point is equal to 1 percent

of the loan principle amount. So on a $500,000

mortgage, one point would cost $5,000. The effect

of paying points on the interest rate varies from one

mortgage to the next, but paying about one point

generally reduces the mortgage interest rate by one-

quarter of a percentage point (0.25 percent).

SHOULD YOU PAY POINTS TO BUY DOWN YOUR MORTGAGE?

from the bench.

SPRING 2016 | 9

DETERMINING BREAKEVENOne of the main determining factors in whether it

makes financial sense to buy down your mortgage

rate is the length of the payback period. Or in

other words, how long will it take to recoup your

investment (i.e., the points you paid) via lower

monthly payments and reach breakeven? In the

example above, it would take 72.5 months (or

about six years) to break even if you paid one point

on a $500,000 mortgage.

In general, the payback period for a mortgage

buy-down can range from as little as two years to

longer than the loan’s maturity — which effectively

means breakeven is never achieved. The shorter

the payback period, the more sense buying down

the interest rate usually makes. Put another way,

the longer you plan to stay in a home without

refinancing the mortgage, the smarter it might be to

buy down the interest rate. This is because you will

have more time to reach breakeven and a longer

period of time to benefit from the lower rate.

A recent issue of the Journal of Financial

Planning included an in-depth analysis of the

mortgage rate buy-down decision. According to

this analysis, the breakeven period for buying down

a mortgage rate by one-quarter of a percentage

point is between four and one-half and six years in

a wide range of financing scenarios.

More generous buy-down scenarios may

achieve breakeven faster than this. However, such

scenarios are rare in the current mortgage rate

environment, the article notes. Also, breakeven

periods for 30-year mortgages are generally

slightly less than breakeven periods for 15-year

mortgages, the analysis concluded.

Of course, you also need to be able to afford

to pay the points upfront. If paying $5,000 to

$10,000 or more in points along with all the other

closing costs is going to make it harder for you

to get into a new home financially, you might be

better off not buying down the interest rate.

BUY-DOWN IN REVERSEBecause of the current low interest rates, some

lenders today are offering borrowers the option

of receiving points instead of paying them. Here,

you would receive cash you can apply to closing

costs in exchange for paying a higher mortgage

interest rate.

Again, the breakeven calculation is one of

the keys in deciding if this is a smart option for

you. But apply the calculation in reverse: The less

time you think you might stay in a home without

refinancing, the more sense this option might

make. Receiving points might also make sense

if you are short on cash to pay closing costs but

have enough ongoing income to comfortably make

higher monthly mortgage payments.

A TRICKY DECISIONDetermining whether or not to buy down your

mortgage interest rate or receive points at closing

can be tricky. Give us a call if you’d like to discuss

this in more detail. We can help you make the right

decision for your particular situation. u

10 | SPRING 2016 FRONTIER WEALTH MANAGEMENT

The Internal Revenue Service has some

advice for taxpayers that may prevent

them from being the victim of a tax

scam: Don’t be fooled by scammers. Stay safe

and be informed. Here are some of the most

recent IRS-related scams to be on the lookout

for:

TELEPHONE SCAMS Aggressive and threatening phone calls by

criminals impersonating IRS agents remain

an ongoing threat. The IRS has seen a surge of

these phone scams in recent years as scam artists

threaten taxpayers with police arrest, deportation,

license revocation and more. These con artists

often demand payment of back taxes on a prepaid

NOTE THAT THE IRS WILL NEVER:• Call to demand immediate payment over the phone or call

about taxes owed without first having mailed you a bill.• Threaten to immediately bring in local police or other law

enforcement groups to have you arrested for not paying.• Demand that you pay taxes without giving you the

opportunity to question or appeal the amount they say you owe.

• Require you to use a specific payment method for your taxes, such as a prepaid debit card.

• Ask for credit or debit card numbers over the phone or threaten to bring in local police or other law enforcement groups to have you arrested for not paying.

DON’T BE FOOLED: IRS SCAMS CONTINUE TO POSE SERIOUS THREATArticle originally released by the IRS

SPRING 2016 | 11

DON’T BE FOOLED: IRS SCAMS CONTINUE TO POSE SERIOUS THREAT

debit card or by immediate wire transfer. Be on

alert for con artists impersonating IRS agents

and demanding payment.

SCAMMERS CHANGE TACTICS The IRS is receiving new reports of scammers

calling under the guise of verifying tax return

information over the phone. The latest variation

on this scam uses the current tax filing season

as a hook. Scam artists call saying they are from

the IRS and have received your tax return, and

they just need to verify a few details to process

it. The scam tries to get you to give up personal

information such as a Social Security number

or personal financial information, such as bank

numbers or credit cards.

TAX REFUND SCAM ARTISTS POSING AS TAPIn this new email scam targeting taxpayers, people

are receiving emails that appear to come from

the Taxpayer Advocacy Panel, a volunteer board

that advises the IRS on issues affecting taxpayers.

They try to trick you into providing personal and

financial information. Do not respond or click the

links in these emails. If you receive an email that

appears to be from TAP regarding your personal

tax information, forward it to phishing@irs.gov.

E-MAIL, PHISHING AND MALWARE SCHEMESThe IRS has seen approximately a 400 percent

surge in phishing and malware incidents so far in

the 2016 tax season.

The emails are designed to trick taxpayers

into thinking these are official communications

from the IRS or others in the tax industry,

including tax software companies. The phishing

schemes can ask taxpayers about a wide range

of topics. Emails can seek information related

to refunds, filing status, confirming personal

information, ordering transcripts and verifying

PIN information.

Variations of these scams can be seen via text

messages, and the communications are being

reported in every section of the country.

When people click on these email links, they

are taken to sites designed to imitate an official-

looking website, such as IRS.gov. The sites ask

for Social Security numbers and other personal

information, which could be used to help file

false tax returns. The sites also may carry

malware, which can infect your computer and

allow criminals to access your files or track your

keystrokes to gain information. u

IF YOU GET A ‘PHISHING’ EMAIL, THE IRS OFFERS THIS ADVICE:• Don’t reply to the message.• Don’t give out your personal or financial information.• Forward the email to phishing@irs.gov. Then delete it.• Don’t open any attachments or click on any links.

They may have malicious code that will infect your computer.

• More information on how to report phishing or phone scams is available on IRS.gov.

FRONTIER WEALTH MANAGEMENT12 | SPRING 2016

MEDIAN ANNUAL HEALTH CLUB DUES:

HOW MUCH DO YOU PLAN TO SPEND ON FITNESS IN 2016?

THREE WAYS TO LOWER YOUR GYM COSTS:

news you can use.

BY THE NUMBERS

— JOURNAL OF FINANCIAL PLANNING

(THAT’S $69 PER MONTH)67% CLAIM THEY NEVER USE THEIR

CLUB MEMBERSHIP

LESS THAN $100

$100 TO $499

$500 TO $1,000

MORE THAN $1,000— poll taken from Money.com

$10: JUMP ROPE

$60: TOP 10 FITNESS DVDS ON AMAZON

$25: RESISTANCE- BAND SET

$40: ONE MEDICINE BALL

$150: SET OF FREE WEIGHTS AND DUMBBELLS

$950: TREADMILL

TOTAL: $1,235

— MONEY.COM

THE COST OF FITNESS

NEGOTIATE. DON’T SETTLE FOR THE STICKER PRICE.

33%

28%23%

16%

JOIN COSTCO. MEMBERS GET DEALS AT 24 HOUR FITNESS.

CHECK YOUR INSURANCE. SOME WELLNESS PLANS COVER PART OF YOUR DUES.

WANT UNLIMITED GYM ACCESS? MAKE YOUR OWN AT HOME AND SAVE

$828

65 . . .PERCENTAGE

OF AMERICANS

WHO IN 2015

SAID THEY WON’T BUY LIFE

INSURANCE OR ADDITIONAL

COVERAGE BECAUSE IT’S TOO

EXPENSIVE.

67 – 80 . . .PERCENTAGE OF AMERICANS

WHO DEFINE

THEMSELVES

AS “HABITUAL

SAVERS.”

2060 . . .YEAR THE U.S. WILL HAVE

ALMOST AS MANY AMERICANS

OVER THE

AGE OF 85

AS UNDER

THE AGE OF 5.

SPRING 2016 | 13

news & notes.

2016 tax data.

OUR TEAM JUST BECAME STRONGER!

M e l i s s a

Franco has

joined the Frontier

Team as an Office

Administrator.

2015 2016

RETURNS RECEIVED: 150.9 million 149.7 million

TOTAL REFUNDS 109.4 million 109.5 million

TOTAL AMOUNT $306.02 billion $305.73 billion

AVERAGE REFUND $2,797 $2,792

With nearly two decades

of experience in the insurance

industry, Melissa brings her

organizational and leadership

skills to her role in Frontier’s

Denver office.

Prior to joining Frontier,

Melissa held a variety of

positions at a Fortune 100

insurance company.

Melissa Franco(Denver)

WICHITA OPEN HOUSE

T he Wichita Frontier team

hosted a spring open house

and client appreciation event in

mid April. Frontier will make a

donation to our charity partner,

Children's Mercy Hospital, in

honor of our clients' support.

CLICK HERE TO VIEW PHOTOS FROM THE EVENT.

The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC's ("Frontier")

investment advisory services and general economic conditions are as of April 22, 2016. This information should not be used or

construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment

strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors

or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this

newsletter is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is

subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an

attorney, accountant or tax professional regarding your specific legal or tax situation.

KANSAS CITY 4435 Main Street, Suite 1100Kansas City, MO 64111815.753.5100

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ST. LOUIS1401 S. Brentwood Boulevard, Suite 925St. Louis MO 63144314.762.6800

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