A single client, 64, a recently retired engineer, lives in a high income tax state. Their only income is Social Security of $31,800 per year. Living expenses are $59,000 with a mortgage payment of $5,000 per year. They have an emergency fund of one year of expenses in cash in a bank. You manage $2.5million for this client, with $1.5million in a taxable brokerage account, $950,000 in an IRA, and $50,000 in a Roth IRA. The client's goals are to maintain their standard of living while generating some additional income to give to charity each year as they do not want to wait until death to start giving. The client has 3 individual stocks in their taxable account making up $1.37million of the $1.5million balance, and they do not want to sell these stocks for fear of capital gains taxes.

Given this client's information, what asset allocation would you recommend for them (stock/bond/cash) and why? How would you talk to them about diversification? How do you think they perceive the risk of their portfolio? Are there any other recommendations you might have for them regarding their asset allocation over time? Ignore estate taxes for this scenario.