ON THE ECONOMIC FRONTIER:

A LOOK AT THE ECONOMY AT THE HALFWAY POINT OF THE YEAR

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ON THE ECONOMIC FRONTIER: A LOOK AT THE ECONOMY AT THE HALFWAY POINT OF THE YEARAt Frontier, we know you trust us to keep an eye on macroeconomic trends and gauge how they might impact your investments. Therefore, we offer a brief look at the U.S. economy and investment markets in order to keep you informed.

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NEWS & NOTESFrontier is pleased to announce that it has been recognized on two national lists this summer.

SUMMER HAS ARRIVEDImportant trends that could affect your investments and your lifestyle, including your investment portfolio and technology.

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ON THE COVER

Q2 2015

FEATURE

DEPARTMENTS

4 FROM THE BENCH: MEDICARE AND YOUR RETIREMENT:WHAT YOU SHOULD KNOW BEFORE YOU RETIREOne aspect of retirement planning that many people overlook is how they will pay for healthcare. Take a look at some common questions many pre-retirees have about Medicare and healthcare expenses in retirement.

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CLIENT EXPERIENCEFrontier recently was a sponsor for the Wichita Air Capital Classic. Frontier will roll out the new Client Portal over the next few months.

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A SLOW START TO THE YEARAfter a solid but not spectacular economic

performance in 2014, the U.S. economy started

2015 with a whimper, instead of the bang many

were hoping for. The good news is that many

economists attribute the first quarter’s weak

growth numbers to one-time seasonal factors

and nuances in the way the government analyzes

economic statistics, at least in part.

The U.S. economy shrank by 0.2 percent

during the first quarter of 2015, according to

revised figures released by the U.S. Commerce

Department in June. This is the third time our

gross domestic product (GDP) has contracted

since the economic recovery began in 2009.

ON THE ECONOMIC FRONTIER A LOOK AT THE ECONOMY AT THE HALFWAY POINT OF THE YEAR

At Frontier, we know

you trust us to keep

an eye on economic trends and

gauge how they might impact

your investments. Therefore, we offer a brief look

at the world economies and investment markets

in order to keep you informed.

FRONTIER WEALTH MANAGEMENT4 | Q2 2015

Q2 2015 | 5

Other GDP declines since then occurred

during the first quarters of 2011 and 2014 — this

could indicate that a pattern seems to be forming

in which first-quarter GDP growth is weak. Some

economists believe this pattern could be a factor

in the lackluster nature of the current recovery

compared to past recoveries. The U.S. economy

hasn’t contracted in three separate quarters during

a recovery since the 1950s, which makes this a rare

economic event that underscores the fragility of the

current recovery.

In comparison, U.S. GDP grew by 2.2 percent

during the fourth quarter of 2014. This capped off a

2.4 percent annual increase in GDP for last year, the

strongest year for U.S. economic growth since 2010,

according to the Department of Commerce.

WHAT CAUSED THE CONTRACTION?Economists attribute the first quarter decline in

GDP to several different factors. These include both

temporary influences like unusually cold winter

weather and the end of the holiday shopping season

and factors that are more economically based.

Among the economic factors contributing to

the weak first quarter growth were a growing trade

deficit caused by the strong U.S. dollar; shrinking

investments in oil exploration as gasoline prices

remain low; and rising inventories and slower

consumer spending due in part to merchandise

delays caused by the long-running (but since

resolved) labor dispute at West Coast ports.

The widening trade gap shaved 1.9 percentage

points from first quarter GDP, according to the

Commerce Department — this was the biggest such

reduction in 30 years. Meanwhile, investments in

wells and mines fell by 48.6 percent during the

quarter, the sharpest such decline since 2009.

Another contributing factor to the

disappointing first quarter growth number was a

sharp slowdown in consumer spending — from 4.4

percent during the fourth quarter of last year to

just 1.8 percent. However, consumer confidence,

a key driver of consumer spending, is starting to

firm up: The University of Michigan’s consumer

sentiment index rose in June from 90.7 to 94.6.

This could be a positive sign for growth in

the coming quarters, since consumer spending

accounts for nearly 70 percent of GDP. However,

this positive sign is somewhat offset by a drop in

the Institute for Supply Management-Chicago,

Inc.’s business barometer in May from 52.3 to

46.2. A barometer reading below 50 indicates

contraction in manufacturing.

Interestingly, while GDP fell during the first

quarter, GDI, or gross domestic income, expanded

by 1.4 percent in the first quarter. GDI measures

how much money was earned in the U.S., while

GDP measures the value of the production of

all goods and services in the country. Some

researchers believe that GDI is a better gauge of

the economy’s strength than GDP.

This is one reason why many economists are

anticipating a healthy second quarter rebound

6 | Q2 2015 FRONTIER WEALTH MANAGEMENT

in economic growth. A survey of economists

conducted in May by Bloomberg predicted 2.7

percent GDP growth in the second quarter.

UNEMPLOYMENT AND HOUSING Another reason for optimism is the improving labor

market. Employers created 280,000 new jobs in

May, well above the rolling monthly average of

207,000 new jobs. This came on top of the 223,000

new jobs added in April. The unemployment rate

ticked up slightly to 5.5 percent but this was due to

more people actively looking for work, which is a

positive employment sign.

In fact, the unemployment rate has hovered

between 5.4 percent and 5.7 percent since January.

This is the longest such stretch since 2008 and we

believe this is an indication that the labor market

may finally be stabilizing — which, of course, is a

positive indication for the economy.

Housing offers yet another encouraging

sign for economic growth. The Commerce

Department announced that new home sales

increased in May by 2.2 percent to an annual rate

of 546,000, which is the highest level since before

the recession in February of 2008. This came on

top of an 8.1 percent rise in new home sales in

April. Meanwhile, sales of existing homes, which

constitute the bulk of the home sales market,

rose in May to the highest level since late 2009,

according to the National Association of Realtors.

In a speech in Providence, R.I., on May 22,

Federal Reserve Chairperson Janet Yellen stated:

“The U.S. economy seems well-positioned for

continued growth. Households are seeing the

benefits of the improving jobs situation.” The

resolution of the West Coast port labor dispute

should also lead to a return to normal trade

patterns that will help growth moving forward.

WHAT ABOUT INTEREST RATES?If the U.S. economy shows signs of improvement

going forward, such as healthy second quarter

GDP growth and continued low unemployment,

this will likely be the green light the Federal

Reserve needs to begin raising interest rates from

the historic lows they have been at for the past

few years. In her May speech, Yellen said, “it will

be appropriate at some point this year” to start

raising rates if economic conditions improve.

At its June meeting, the Federal Open Market

Committee (FOMC) declined to say specifically

when it would raise interest rates for the first time

in nine years. However, Federal Reserve Governor

Jerome Powell stated on June 23 that he expects

the first rate hikes to occur in September, followed

by a second rate increase in December.

“The U.S. economy seems

well-positioned for continued

growth. Households are seeing

the benefits of the improving

jobs situation.”

— Federal Reserve Chairperson Janet Yellen, in a speech in Providence, R.I., on May 22.

Q2 2015 | 7Q2 2015 | 7

Given that higher interest rates have not been

a matter of if, but when, for years now, there

is cautious optimism that the inevitable rate

hikes will not cause too much disruption to the

economy. Also, the Fed has stressed that hikes

will be small and gradual.

The housing industry may be the most

susceptible to rate hikes. However, many experts

believe that continued strong employment and

macro demographic shifts like a growing number

of young Americans starting families and buying

homes could offset higher mortgage interest rates.

BEYOND OUR SHORESLooking beyond our borders, the international

economic news continues to be dominated by

Greece and its ongoing debt crisis. In 2009, Greece

announced it had been understating its deficits

for years, and the country was soon shut out from

borrowing in the financial markets. It eventually

received two separate international bailouts

totaling about $264 billion, but the bailouts

imposed strict austerity conditions requiring deep

budget cuts and heavy tax increases.

Unfortunately, the bailouts haven’t solved

Greece’s financial problems. The economy has

continued to shrink, unemployment is currently

above 25 percent and government debt remains

close to 200 percent of GDP. A new left-wing

government was elected in Greece early this year

that is currently trying to renegotiate the debt,

but frustrated creditors say Greece has failed to

meet its austerity

o b l i g a t i o n s .

Meanwhile, Greece

is again headed toward

bankruptcy.

So why are the economic

trials of a tiny nation with

just 11 million citizens such a

big deal? The fear is that if Greece

goes bankrupt or defaults on its debt and leaves

the eurozone, this could result in instability in

Europe that could ripple throughout the rest of

the world economy.

U.S. STOCK MARKETS TREADING WATERBack here at home, the stock market has mostly

moved sideways so far in 2015. After closing last

year with solid gains — 7.5 percent for the Dow

Jones Industrial Average, 11.4 percent for the S&P

500 and 13.4 percent for the NASDAQ — the major

indexes are slightly up so far this year. As of June

30, the Dow is up 0.03 percent, the S&P 500 is up

1.23 percent and the NASDAQ is up 5.90 percent.

At Frontier, we are cautiously optimistic that the

positive trends we’re currently seeing will continue

and the U.S. economy and financial markets will

finish the year strong. We don’t have a crystal

ball, so we can’t make any guarantees. This is why

we stress portfolio diversification and investor

discipline as two of the most important factors in

long-term investing success. u

8 | Q2 2015 FRONTIER WEALTH MANAGEMENT

By Mark Howe, CFP®

Senior Financial Planner

One aspect of retirement

planning that many

people overlook is how they will pay for

healthcare. Some people assume that once they turn

65 years old and qualify for Medicare, all (or almost

all) of their healthcare expenses will be covered free

of charge. However, this is not the case.

Those nearing retirement also sometimes get

confused about when they need to sign up for

Medicare especially if they are still working, and

what impact (if any) their decisions about when

to receive Social Security retirement benefits

will have on their Medicare benefits. This article

takes a look at these and some other common

from the bench.

questions many pre-retirees have about Medicare

and healthcare expenses in retirement.

WHAT EXACTLY IS MEDICARE?Medicare is the federal health insurance program

available to Americans who are generally 65

years of age and over. It consists of the following

four parts:

Most people do not pay a monthly premium

for Medicare Part A, as a result of having paid

payroll/Medicare taxes while working. The

monthly premium for Medicare Part B ranges

from $104.90 to $335.70 in 2015, depending

on modified adjusted gross income from 2013

(current premiums are dependent upon the tax

return from two years ago). In addition, Part B

has a $147 per year deductible.

MEDICARE AND YOUR RETIREMENT:WHAT YOU SHOULD KNOW BEFORE YOU RETIRE AND ENROLL

u PART A: Hospital insurance that covers inpatient hospital visits, skilled nursing facility and hospice care, and some home health care.

u PART B: Medical insurance that covers doctor’s visits, preventive services, outpatient care and medical supplies.

u PART C: Medicare Advantage (or MA), which is offered by private companies contracting with Medicare and provides Part A and Part B Medicare benefits together, usually via an HMO or PPO.

u PART D: Prescription drug coverage that is offered by Medicare-approved insurance companies (usually included as part of an MA plan).

Q2 2015 | 9

The right choice for you will depend on such

factors as your health condition, length of time

until you turn 65 and are eligible for Medicare,

and the cost of group retiree insurance, COBRA

coverage or an individual policy.

Meanwhile, if you plan to continue working

past your 65th birthday and will still be enrolled

in your employer’s group health plan, find out

how Medicare could affect your group insurance.

Some group plans require Medicare-eligible

employees to enroll in Part A (which is free), but

not Part B. Also find out if your group plan will

cover prescription drugs after you turn 65.

WHAT ABOUT A MEDIGAP POLICY?Finally, remember that just because you have

Medicare doesn’t mean you won’t have to pay

any healthcare expenses in retirement. There are

premiums, copays, coinsurance and deductibles

associated with Medicare that you will be

responsible for.

Therefore, you might want to look into buying

a Medicare Supplemental Insurance, or Medigap,

policy. These policies are sold by private insurance

companies to help retirees cover some of their

out-of-pocket healthcare expenses. Keep in mind,

though, Medigap policies generally don’t cover

expenses like long-term care, vision and dental care,

hearing aids or eyeglasses that also are not covered

by Medicare. The 6-month open enrollment period

for Medigap policies begins at age 65. u

In certain circumstances, individuals will be

automatically enrolled in Medicare Parts A and

B. These include individuals who are receiving

Social Security retirement benefits before age

65 and those who have a disability. Otherwise,

you will need to apply for Medicare Parts A and

B. This can be done as early as three months

before the month you turn 65 years old, and as

late as three months after the month you turn 65

(therefore, a 7-month window total). Otherwise,

individuals might have to pay a higher premium

amount due to late penalties, or be left with

gaps in coverage. It’s important to note that

your decision of when to start receiving Social

Security retirement benefits has no impact

on your eligibility to receive Medicare. So

be sure to sign up for Medicare during the

seven-month window described above if you

are not automatically enrolled — even if you

have not yet started receiving Social Security

retirement benefits.

RETIRING BEFORE AND AFTER MEDICARE ELIGIBILITYIf you are planning to retire before you are eligible

for Medicare, you will need to plan for your

healthcare coverage during this time gap. Your

main options are participating in your previous

employer’s group retiree healthcare plan (if one

is offered), purchasing COBRA health insurance

from your previous employer, or buying an

individual health insurance policy.

10 | Q2 2015 FRONTIER WEALTH MANAGEMENT

It’s a season when many think about recreation, travel

and vacations. As you do that, you can trust Frontier Wealth

Management to keep a watchful eye on the important

trends that could affect your investments and your lifestyle,

including your investment portfolio and technology.

THE STOCK MARKET AND YOUR PLACE IN ITSummer is the perfect time to do a

mid-year review of your investment

portfolio. Part of that review should

include your stock market allocation.

Depending on your life stage and how

well various sectors and investments of

the market have performed, you may

consider rebalancing. Moving some

excess cash into an undervalued market

or converting some stock market

profits into income vehicles can help to

ensure that your portfolio continues to

grow in alignment with your personal

investment objectives.

Your mid-year review might also

inspire you to bump up your 401(k)

contribution or your contributions to

other investment vehicles. As we know,

those small allocations today can grow to

sizable financial benefits when you finally

need to tap those resources.

TECHNOLOGY TRENDSThe summer is often a season when we

catch up on home improvement projects

that we have been putting off too long.

Some of those might involve the latest

technological trends. Michael Bjorn, an

expert in consumer trends at Ericsson, has

identified the top 10 technological trends

in 2015. Interestingly, six of them directly

involve your domestic or family life. These

could radically improve the way you live.

u THE STREAMED FUTURE. Most

regular TV watchers

now obtain their

p r o g r a m m i n g

via streaming

services instead of

conventional cable.

u HELPFUL HOMES. More consumers

want their homes to be as connected as

they are. This means

that their smartphones

will provide real-time

knowledge of who is

coming and going along

with the times of various

crucial events such as coffeemaker shutoff,

sump pump activation, thermostat status

or plumbing leak indications.

u SMART CITIZENS. Being able to

compare a home’s use

of gas, electricity and

water with neighbors

via smartphones is

something that 70

Q2 2015 | 11

FRONTIER WEALTH MANAGEMENT

information about usage and physiology.

Envision cups and plates that monitor the

type and amount of food, bedding that

monitors sleep patterns and medicine bottles

that regulate dosage.

u DOMESTIC ROBOTS. Doing laundry is a

chore that 57 percent of consumers would be

comfortable delegating to a robot. Other top

picks include tutoring on

new technology, cooking

meals, chauffeur services,

nutrition advice, help with

physical movement or stair

climbing, help with children’s homework and

simply keeping company at home.

LOOKING FORWARDIn your busy schedule, we hope you can find

time to kick back and enjoy the summer.

Relax in ease knowing that Frontier is

closely monitoring your investments

to ensure you stay on the path toward

financial success. u

Being able to compare

a home’s use of gas,

electricity and water

with neighbors via

smartphones is something that 70

percent of people want to do ..."

percent of people want to do, and they

believe that these options will be common

within five years.

u THE SHARING ECONOMY. More

than half of all smartphone users are

interested in the idea of using the

Internet to accelerate

the sharing, bartering

or renting of rooms,

vehicles, appliances

and other household

items. Motivations are convenience,

sustainability and making money.

u LONGER LIFE. Many consumers

believe that technology-enabled

household items such as plates, bedding

and medicine

containers would

lengthen life and

enhance health by

c o m m u n i c a t i n g

SOURCE:Ericsson. 2015.

10 HOT CONSUMER TRENDS 2015.

http://www.ericsson.com/res/docs/2014/

consumerlab/ericsson-consumerlab-10-hot-

consumer-trends-2015.pdf

12 | Q2 2015

Q2 2015 | 13

WICHITA GOLF CLASSIC

F rontier recently

was a sponsor

for the Air Capital

Classic in Wichita,

Kan. The annual golf

event helps raise funds for several area charities.

Since 2006, local charities have received more

than $850,000 in donations through the Air

Capital Classic. u

news & notes.

FRONTIER IN THE NEWS

F rontier is pleased to announce that it has been

recognized on two national lists this summer.

Frontier was ranked No. 5 on Financial Advisor

magazine's list of the 50 Fastest Growing RIAs in

the United States. Based on figures from Financial

Advisor’s 2015 RIA survey, firms were ranked by their

percentage of growth in assets under management

from 2013-2014. Frontier ended 2014 with $1.226

billion in AUM and 155.95 percent growth in assets.

Of the 562 firms that qualified for the list, Frontier

placed in the top third of overall total assets.

Frontier has also been named to Financial

Times 300 Top Registered Investment Advisers,

as of June 18, 2015. The list recognizes top

independent RIA firms from across the U.S.

More than 2,000 elite RIA firms were invited

to apply for consideration, based on their assets

under management (AUM). The 630 RIA firms

that applied were then graded six criteria: AUM;

AUM growth rate; years in existence; advanced

industry credentials; online accessibility; and

compliance records.

“It’s an honor to be recognized for our growth

and achievements over the past year,” said Frontier

CEO Nick Blasi. “It truly is a testament to all the

hard work and dedication our team has put forth

in creating an environment and culture that allow

us to achieve such rapid growth.” u

client experience.

CLIENT PORTAL

O ver the next few months, we will continue

rolling out our Client Portal, accessible via the

Frontier website. The portal will give you access to

current market data and portfolio performance,

as well as a secure document vault allowing us

to upload and share documents efficiently and

securely. If you're interested in getting set up with

access to the client portal, please reach out to your

wealth advisor or client service specialist. u

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 June 30, 2015. 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.

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