Asset Allocation Implementation for a Retired Client

Maria is a 50-year-old financial advisor with 20 years of experience managing client portfolios. Her current client, a 70-year-old retired engineer, has a portfolio valued at $1.5 million and relies on it for income during retirement. The client has a moderate-risk tolerance and seeks to balance income generation with some capital appreciation. Maria is tasked with implementing an asset allocation strategy that meets the client's needs while also considering the prevailing economic environment, which includes rising interest rates and increased market volatility.

In your response, discuss the key steps Maria should take in the asset allocation implementation process. Identify specific asset classes that should be included in the portfolio, justify their inclusion based on the client's objectives and risk profile, and address how she might adjust the allocation in response to changing market conditions.