Kairos, I was in darn near exactly your situation about four years ago, with similar figures. Here is what I learned so far.
1. It was extraordinarily difficult to find competent professional help when dealing with an inherited IRA. Most banks, and other typical investment options were clueless, even if they were busy claiming otherwise. In time, my estate attorney and accountant helped me to do the right thing, while carefully following the IRS rules to the letter.
2. Like you, I put my money in a high fee "managed account". After taking the time to get an education, on forums like this, it became abundantly clear that, like the vast majority investing with individual brokers with the standard 1.25% fee, I was getting screwed. I began following the
http://jlcollinsnh.com/stock-series/ protocol for my other investments, and the difference was startling. While the market was rocketing off the bottom, my broker was stumbling around doing things like buying metals and leaving cash on the sidelines. The results were devastating. I lost tens of thousands by not being indexed with my inherited IRA. Your case is no different, you are down about a quarter million, as compared to initially putting your IRA in the Vanguard VTSAX. Once you pay somebody one percent of a large sum of money, annually, to do something that you can do much better, and do so at less than 10% of that fee, you already are getting screwed. The reason is simple. Statistically, there is no broker out there that is capable of beating the market on a medium to long term duration. The fact that this one is a shade under, over the long term is far better than most, but not acceptable. Not only is he failing to reach a standard that you can accomplish with far less risk, he is charging a lot of money to underperform you.
3. The forced distributions can be a hit to your portfolio, but only if you handle them poorly. Since you are young, they are a fairly low amount, and will increase every year, adjusted to your life expectancy. They are taxed as ordinary income, have no withdraw penalty, and stiff penalties if not taken at all. The trick to continuing to build wealth, is to take the tax hit and be disciplined enough to roll the amount right back into investments. I have all my inherited IRA funds set up to Mr. Collin's formula, and run a matching set of ETFs for my other money. At the end of every year, the forced distributions come, I deposit the checks and then divide the total into the funds, while doing an annual rebalancing. In your situation, dumping this money into your own IRA or Roth might be the best choice.
4. Some here claim that you did pretty well in the last eleven years, since your broker feeds you info. that he typically "just missed the index". To put this erroneous claim in perspective, if you remove the wild card of the forced distributions, $450K in the VSTAX since 2003 would of resulted in a current balance of roughly $796K. Had you initially rolled your distributions into a VTSAX account, after paying taxes, you would be down by roughly 20-30K, but ahead of your broker's performance by at least 250K.
5. Finally, there is a lot of very cautious advice here about not doing anything irrational, taking small steps, talking to your planner, etc..... Sorry, but that doesn't pass the smell test for me. Low cost index funds from giant institutions like Vanguard and others have a rock solid, deep, long and well documented performance history. There is a 99.% chance that YOUR broker has been unable to outperform them consistently, over decades long comparisons, and every day you continue to do business with him, is another day that you continue to damage your financial future.
