My father has just turned 70 and is about to retire and start drawing social security. He recently met with a CFP who is going to be managing his retirement accounts for 1% of assets as a fee. He really likes the guy and feels well taken care of, but the Portfolio seems a bit all over the place. It's not truly large enough for his retirement needs so he's hoping to keep a somewhat aggressive tilt and has about one third in an IRA that is 100% invested in the Blackrock Global Tactical Strategies Portfolio and the rest in a 401k with the funds summarized in the image below:

I'm glad that he feels like he is in good hands, but I'm concerned that the advisor is spreading him too thin to be useful (for commissions?) and the fee seems excessive since he is already concerned that he doesn't have enough for retirement. The fee does includes general planning help beyond just portfolio management whenever my father has questions along with some proactive discovery in order to get a good background.
I wondered what people's thoughts here might be?

Old_Skeet has pretty much just been pondering for the past 30 days, or so, since the S&P 500 has rebounded from a recent low, week of Fed 3rd, and has had a nice upward move since then. Even though it has pulled back form a recent closing high of 1878 by a little better than two percent I am looking for a price target of around 1800 before valuations in the Index become more to my liking. At this level I believe the Index will have a P/E Ratio (TTE) of a little better than 17 (trailing twelve month earnings) and a P E Ratio (FEE) of 15 and change (forward earnings estimates). I am thinking some of the emerging markets are now offering some good value if one has a mid to long term outlook and, with this, I have been nibbling in these. For the most part though, I have just been looking and buying a little around the edges. Unless I spend some cash soon I'll have had a cash build during the first quarter coming mostly from mutual fund distributions.
Have a good weekend ... and, I wish all "Good Investing."

@Scott: Your late, your late for a very important date ! 5 minutes to late.
Regards,
Ted
I'm Late: White Rabbit:

Hi Willmatt72,
Wow! You are presently in a superb position still 15 years away from retirement.
Given the magnitude of your current portfolio, its asset allocation distribution, and your planned savings/contributions, that portfolio will grow with high probability until your retirement date. Unless you anticipate extremely high withdrawal rates, you already have a high likelihood of portfolio survival for a long (30 years or more) drawdown period.
As General George Patton said: “Take calculated risks. That is quite different from being rash.“ You need not be rash in this instance and need not accept any unwarranted risk.
You might want to explore some what-if options, or, after a provisional decision has been made, become more comfortable with that decision by doing a few parametric Monte Carlo simulations. Today, Monte Carlo simulations are readily accessible to an individual investor. Here are Links to two easily used Monte Carlo calculators:
http://www.portfoliovisualizer.com/
and,
http://www.moneychimp.com/articles/volatility/montecarlo.htm
I especially like the Portfolio Visualizer version. Please give it a test ride. However, its inputs are a little more complex than the MoneyChimp version and requires two sets of sequential inputs: a pre-retirement period and a during-retirement period.
The MoneyChimp simulation links the two segments into a single Monte Carlo simulation. It permits a user to specify estimated portfolio returns and volatility (standard deviation) both pre and post the retirement date. You might want to start your Monte Carlo work at MoneyChimp.
Please exercise either simulator to explore a range of what-if scenarios that are within your risk tolerance zone. A major output from each Monte Carlo case explored is an estimate of portfolio survival probability at the end of the study period. By changing the inputs you get to test sensitivity of this end result to whatever portfolio asset allocation and performance statistical assumptions you wish to examine.
After a bunch of runs, you can decide what asset allocation and what portfolio drawdown level puts you into an acceptable risk zone. I might be happy with a 95 % likelihood of portfolio survival whereas you might demand a 99 % success probability. You get to explore various asset allocation percentages, the returns statistics, and the drawdowns that allow you to reach your goals. Monte Carlo analyses is easy, informative, and fun to use.
Good luck. You have already been blessed with good fortune given your inheritance.
Risk can never be entirely eliminated in the marketplace, but it can be controlled. Complete outcome certainty is impossible. That uncertainty is precisely within Monte Carlo’s wheelhouse. It was designed to precisely address uncertain outcomes.
You are doing the necessary fact-finding task. Monte Carlo simulations will allow you to put your fact-finding into a likely outcome context; it’s just another tool to tilt the successful retirement odds a little more in your direction. It should increase your confidence level.
As a general rule, I do not believe that financial advice casually offered over the internet is either reliable or trustworthy. I am not offering advice here. I am simply giving you an alert that Monte Carlo tools are accessible, are easy to use, and might help you in making your investment decisions. Freedom to choose your toolkit is always in your corner.
Best Wishes.

@willmatt72
A note about the taxable status of the majority of the monies.
Add this to your list of things to do :) ......
Fidelity Personal Retirement Annuity
The above link is an overview with some other internal links and a short video.
This link is for the investment choices within the annuity.
Normally, I am not a fan of annuities; as sold by insurance companies. However, if our house were to inherit a sum of money beyond our current needs, we would fully review the above annuity plan in order to defer taxation. A few notes from my recall about this product......55 fund choices, no brokerage feature (so no stock, etf, index or other vendor funds available, except the few along with the Fidelity choices). The cost of the annuity is .25% added to the expense ratio of a given fund. No surrender or holding periods that lock up the money at a cost, as is common with annuities. Review the exchange restrictions among the funds; as there are limits as to how often one may move monies around within the annuity.
Fidelity is not the only company to offer a similar plan; but I don't have that MFO discussion at hand and short of time today.
The short term downside for this would be the taxation of the sale of current holdings in order to fund such a plan.
Anyhoo........perhaps something to review relative to your circumstance.
Take care of you and yours,
Catch

Congrats on your accomplishment. I'm 15+ in retirement and have run a very conservative mix for many years - (with only a fraction of your wealth:-)
But, doubt I would change much if it were a larger sum. Like you, I want mainly capital preservation while earning a few % better than money markets or short term bonds would offer. We may both live a lot longer than we anticipate; so you don't want to remove risk (and potential growth) completely from the mix.
Edit (@ 3:54)I should have also mentioned inflation as the other big "?".
Lots of great suggestions from the others. Couldn't resist dropping by. Regards

You just mentioned tax efficiency. I wonder whether you will be able, in practice, live for several years with relatively stable bond funds where your money will not grow much or may even slowly fall, but you will continue paying taxes for them since they will distribute taxable dividends? It may become annoying, and then you may decide that actually your desire to live with 25% risk is unrealistic, and you may buy stocks at a wrong time. So I would suggest to think about taxes and then think again about risks you are willing to take, and only then make a decision.

Catch - your points are well taken and cause for some reflection on my part. I can tell you that 75% of the portfolio is in taxable accounts because it is inherited money. The remaining 25% is in tax-deferred accounts (401K, Roth IRA, Rollover IRA). I'm maxing out my Roth IRA each year, but there's not much else I can do with this breakdown. As a result, taxes are a concern moving forward. That's one of the reasons why I've purchased a few muni bond funds (MITFX, SXFIX) with good managers/record. I intend on holding them for the long-term due to their respective durations. I've noticed that some of the funds that I hold (BERIX, VWENX) are not the most tax efficient and I've seriously considered moving some of that money to more tax efficient ETFs. However, I would have to determine whether any drop-off in performance is worth the tax ramifications on the other end.
I appreciate the time you've taken to offer your input and feedback. I'm going to digest this and other posts this evening when I have more time to myself.

@willmatt72
First, it has been stated here at MFO that this type of interchange is dangerous among strangers, especially on the internet. So, I'll pretend we're, face to face, at the Mutual Fund Bar and Grill just down the street, having a casual chat; and we're playing "Devil's Advocate" with our portfolios.
You noted:
1. "I'm just curious about your thoughts about what kind of risk is acceptable for a 49-year old about 15 years from retirement with a $1.1 million portfolio.
2. I have very little debt (owe $120,000 on a mortgage on a $425,000 condo near Boston).
3. Personally, I don't believe it makes sense to take any unnecessary risk so I've been about 40% bond funds, 35% equity funds, 25% cash.
4. One of my goals has been to generate some income to help pay bills, etc.
5. But I'm equally focused on capital preservation. Losing 25% of principle in one year is not acceptable to me at this point."
>>>1. Our house is retired, so without prospect of inbound cash flow (no input to previous 401k, 403b, or Roth IRA) from active employment. Your house still has active cash flow from employment. This may help support your thoughts toward a moderate allocation mix for your investments; as that if the equity markets did slip too much for your comfort zone, you have the choice of either reducing these holdings or adding to the holdings via a dollar cost averaging (assuming you are doing this with retirement accts on a monthly basis.
>>>2. We're both in the same place with this aspect of running a controlled budget with our households. We have a good grasp of understanding between the wants and needs for our budgets.
>>>3. As you voice your portfolio mix, I eventually reply that your current allocation is very conservative. Of special note is the large cash position; which is effectly dead money if in money market or CD holdings. The money is not keeping up with inflation and future taxation. $275,000 of your portfolio is too much to have asleep at the investing wheel, IMO.
>>>4. Income generation goals. I mention that in this equity-centric investment world; most folks think about bonds or related (dividends) as income producing. This is likely true from a yield viewpoint; but not so if the bond/asset value is declining. Then the "income" could be moving backwards. I explain that our house views income from whatever method as the positive return on the invested monies, period. We care not whether the income is from a yield/dividend or the appreciation of the underlying value of the investment. Tis all positive cash flow to the accounts. An offered example was our investments into the high yield bond sector in early 2009. Wow!; look at those yields in the upper teens.....well, those yields faded really fast as money flowed back into the HY bond sectors. We didn't care about that, as the underlying values of the bonds was moving upward at a fast pace. Technically, we gained "income" from both ends of the investment.
>>>5. Capital preservation. Yes ! Not just for the older folks; but perhaps of more consideration for the older folks. 'Course the critical point here is whether one sells at the wrong time during a period of fear. Making up the value of losses in such a period is a problem for the young investor, too; as that money is now missing. The money will never be in the account again to live the happy life of ongoing compounding, a most profound grower of money. Yes, a young investor can replace the money with new money from their active employment; but this is not a plan that could be repeated many times without permanent damage to one's investment portfolio into the retirement years.
cman asked a critical question, too. Is this money in tax sheltered accounts? IMO, this would likely have some impact upon where your monies are invested and/or restrict money movements for reasons of current taxation. I am not qualified to comment about this area of investing; as our retirement portfolio is all tax sheltered at this time, so investment moves at our house do not consider current taxes. The cost basis going forward when the IRS requires beginning withdrawals will be what it becomes.
How active do you choose to be in monitoring your portfolio? Would you prefer the active managers in the balanced or moderate allocation funds area? Members here noted a few to review. Or perhaps a few etf's for your own mix?
cman, as well as others here have noted that asset allocation is pretty much impossible to determine for another. I will agree. You have already established a "comfort zone".
A kinda summary: If one invested 50/50, 10 years ago today, in VTI and AGG (not my favorite bond choice, but...) the combined annualized return would be 8%. 'Course one may have encountered what I call the "twitches"; as VTI traveled downward about -55% from October of 2007 through March of 2009. We're not a trading house; but do average about 1/3 of our portfolio moving around in any 12 month period.
We don't hold any "cash". In this equity-centric marketed investment world; our cash is always in a bond fund of some flavor. We view this "cash" placement in this light......If we were to park 25% of our portfolio in cash (I will presume money markets or CD's or other low yield/safe areas) for 12 months, we would calculate a forward loss of -3% for the period from a nominal inflation rate eating away at the value of that cash. We prefer to use a "calculated" risk of investing into a bond fund, index or etf and "take the chance" that the fund will not lose more than 3% in the same time frame. If this would happen, we are no worse off than the cash position would have returned. A large "cash" position for our house currently is PIMIX. A very narrowly focused bond sector at this time and the fund uses all of the tools available in the goody bag for results. But, we place the manager high upon our list of knowing what he is doing. A slow investment train to view passing by, without a doubt. But, this train just keeps traveling along; slowly and consistent (at this time), not stopping at the switching yards and lossing time (money).
Our house follows our holdings daily with a week ending review. This does not cause us to make quick changes to the portfolio; but does create, at least for us, an intuition as to trends. When we mix this review with what we consider in all other areas globally, this allows us to make determinations about any needed changes. Six weeks ago we were 40% equities; today that number is 15%. Our largest equity holdings are PRHSX and VSCPX. Other equities exist within LSBDX and FAGIX. The equity sales monies moved into TIP and other TIPs related funds available in other accounts. We felt that TIPs were oversold in 2013 and are still needed by pension and related groups. Even the lonely TIPs have a long term average return around 5%. 'Course, these may get further bumps upward depending on how silly events turn with Crimea, especially beginning again, this Sunday.
Our house's opinion is that the 30 year bond market rally still is not dead. Too many overhangs and deflationary pressures exist. But, we will carefully monitor this area, too. As you know; not unlike the equity markets, there are many flavors of bonds, many times moving in different directions.
Now, if only those I know and who ask; "How is the stock market doing...?" would recall that I always correct them to the fact that bonds do exist, too. Without the (larger dollar value) global bond market offerings, few equity companies would be able to do business or exist at all. Be assured that bond areas investors do well, too; over time.
NOTE: I began writing this prior to MikeM and msf replying, and your most recent post regarding your holdings.
Regards,
Catch

I re-read your original post a couple times and I think there are two statements you made that make what you are asking contradictory. For one, you ask what is the acceptable risk for a 49 year old 15 years from retirement. By the book, you should be much more aggressive than 35% equities. Maybe 2x as much. But then you already limited yourself by saying you will not accept a 12 month draw-down of 25%. Most moderate balanced funds did drop ~25% in 2008.
So, what is your goal, an acceptable risk portfolio to grow your wealth 15 years from retirement or a sleep easy risk level because you already have the funds needed for retirement if you just keep principle plus keep up with inflation? To be honest, 1.1M sounds pretty good now, but it won't be all that great retiring with that in 2029 when you still may have 40 years to live.
You may have to better understand your goals and your retirement needs and maybe accept that a draw-down is part of investing long term. 15 years out you may need to accept that fact. 10 years out recalculate where you are. 5 years out of retirement - you need to reassess again.

Hi Mike - I don't think my statements are contradictory at all. Sure, a balanced fund can lose 25% in one year, but if you use it with more conservative investments, then the 25% becomes a loss of 10-15%. Obviously, I would not put all my eggs in one fund, such as VWENX. That doesn't make sense based on my goals.

I've held about 25% in cash as a holding pattern to determine whether it should be held in CDs, money market funds or possibly invest another 5-10% in either equities or bonds. Currently, I do hold a rather large stake in VWENX and BERIX, as well as PIMIX and DODIX on the bond side. I also hold some muni bond funds for income, as well as some international (FMIJX, ARTGX, GPROX) funds. I believe that I've picked some good funds, but I just wonder about risk over the long-term, and whether it makes sense to deploy some of that cash or keep it in low-risk instruments, such as CDs. It does appear that 25% cash is rather large and actually will be eroded in terms of value over the long-term.

As you suggested, VWELX is indeed still open - Vanguard has simply closed some of its distribution channels (just as several years ago, I believe it closed access to VWENX - another share class of Wellington - through third party brokers).
But even if Vanguard had "closed" Wellington, it generally keeps its funds open to investors with $1M portfolios ("Flagship" investors). That said, investors who have access to funds that Vanguard has closed (either because they are Flagship investors or because they already have open accounts) are often limited to $25K investment/year. See, e.g. PRIMECAP: https://personal.vanguard.com/pub/Pdf/sp59.pdf?2210083223
With respect to the original question - I think that 40% equity is too low for someone 15 years from retirement. For example, using the old rule of thumb of (100 - age) for equity, that suggests 50% in equities. (The newer version is (110 - age), which indicates 60% equity). Another rule of thumb (these are all old "rules", take them for what they're worth) is a fairly static 60/40 in retirement with a 4% draw down. The point is not that these particular rules are good for every situation, but that even in early retirement a 50-60% allocation in equities may be prudent. 15 years from retirement suggests at least that much.
That said, VWELX seems to be a good suggestion - it is at the conservative end of these "rules of thumb", and a fine fund. If one does want to go more conservative, I agree with the suggestions made by others; Berwyn Income and Wellesley Income are excellent choices.
Finally, let me do one calculation: draw down. If we assume that Willmatt72 is keeping 25% in cash, the max draw down of the portfolio is only 75% of the max draw down of the remainder of the portfolio (the 25% cash having 0 draw down, and in fact earns a little interest).
Using the figures Charles provided, a pure Wellington/cash portfolio would expect to draw down less than 25% (barely - about 24%) based on its Feb 2009 "worst case" (weighted 3/4) and 2009 interest rates (about 2%, weighted 1/4). The "worst case" draw down for BERIX/cash (75/25) might be around 9 1/2%
(Late 2009 rates: http://www.consumerismcommentary.com/savings-account-interest-rate-roundup/)

I re-read your original post a couple times and I think there are two statements you made that make what you are asking contradictory. For one, you ask what is the acceptable risk for a 49 year old 15 years from retirement. By the book, you should be much more aggressive than 35% equities. Maybe 2x as much. But then you already limited yourself by saying you will not accept a 12 month draw-down of 25%. Most moderate balanced funds did drop ~25% in 2008.
So, what is your goal, an acceptable risk portfolio to grow your wealth 15 years from retirement or a sleep easy risk level because you already have the funds needed for retirement if you just keep principle plus keep up with inflation? To be honest, 1.1M sounds pretty good now, but it won't be all that great retiring with that in 2029 when you still may have 40 years to live.
You may have to better understand your goals and your retirement needs and maybe accept that a draw-down is part of investing long term. 15 years out you may need to accept that fact. 10 years out recalculate where you are. 5 years out of retirement - you need to reassess again.

I see Japan's getting hammered. My position in MJFOX dates from just the New Year. Too early to bail(?) I had a stray thought last night about ADDING to it....It's down about -5% for me. Morningstar's ytd numbers are something very near that, too. It's 6.3% of portfolio.

Long term Treasuries are showing periodic shine and it may be the asset that is shining for PRPFX.
At Vanguard, I like EDV (Extendeded Duration Treasuries) during these "flight to safety moments".
Here's EDV charted with VTI (Total US Market) along with FXI (China LC companies) and PRPFX. EDV seems to do a good job of moving opposite FXI. I think of EDV and PRPFX are "insurance policies" against market downturns.

Started building an income portfolio (30% of our taxable money). A third of the portfolio will comprise of high risk high divident "stocks". So far, over the last week, purchased KMP, APL, SDRL.
L.

I think that is a good idea and kind of what I'm doing - I just think the only issue is that you have to be willing to take "shocks" in some/all/most of these names if interest rates do (ever) really move higher in a sustained manner. I own KMP, as well as OAK and BIP.
I think the other place I'd suggest looking is Canada. A number of Canadian REITs and oil names not only have good dividends, but many of them pay monthly rather than quarterly (Vermilion Energy, for example - VET in the US) You do have the foreign withholding tax, but still some of these names are interesting. I own Freehold Royalities (FRHLF.pk), which yields about 7.25% and is kind of an interesting oil royalty play managed by an exploration company owned by the pension of the Canadian National Railway (which I also own.) From the website: "The CN Pension Trust Funds also own approximately 26% of Freehold's common shares."

Thank you, Scott. Will look into the canadian names.
Price fluctuation won't scare me as I get fixated on a payout, but dividend cut might.
L.

I too (also being outside Boston) am rereading your first sentence many times, trying to reckon what you mean and then infer what you think you will need for cashflow in 15 years. cman and Charles have pointed the way. My own take is nothing but equities ... yet could you live with that, sleep, and not fuss? Answer seems to be no way. So one thing you could do is ask yourself why that is. I would put it all into AOA if I were lazy and had zero OCD. But yeah, >25% slump in early 09. (For any choice, graph beginning 08 to end 11 and see how it went.) If you will need 150k a year projected down the road, vs 100k a year, it changes everything. So more info, if you can figure and share it.

Rode 2008 down; didn't sell; rode it up. Most of my funds are on the same slope as pre 2008. That took 5 years; Willmatt72 has 15. At 5 yr pre-retirement MAXDD matters much more than at 15 yr. Bonds are risky now in the opinion of people smarter than me, although Grundlach sees them positively currently, so might need to invest with hm.

@STB65. The "nice" is driven by objective to minimize MAXDD. I think that knowing your drawdown limit is best way to knowing the kind of investor you are, no? It's easy when the market is going up, but when it heads south, not so much...

Willmatt72, these people are being entirely too nice. 40% bonds at age 49 with 15 years to retirement and GMO predicting negative returns against inflation for bonds? I'd need a lot of melatonin to sleep well.
At least look at target maturity bond ETFs for a significant portion of your bond allotment (unless you already are in them). You might be made whole at maturity.
25% cash might be a good idea this quarter (perhaps up to the mid-term elections), but you need to average in to equities with some of your cash sooner or later, perhaps the dividend ETFs, considering your risk aversion. (Or you can put it in Berwyn.)