It's hard to say what advice to give someone with a different risk profile, and also with a different level of comfort with DIYing personal finance. My inlaws asked me for advice a few years ago on a proposal they'd gotten from a financial planner, but they absolutely didn't want to hear what I had to say. The idea of managing their own investments via the Vanguard website (even with my help) was simply too daunting.
That being said, I don't think I'd keep $180K in cash. If she needs $900/mn, I'd keep maybe 5 years worth in cash (i.e. $54000) and then invest the rest. And in terms of making a counter argument to NWM, it's tough to say anything specific without seeing their proposal. Philosophically, though, she already has a bunch of annuity type assets (Social Security, pension, annuity) so she may benefit from the added diversity of some non-annuity type investments.
And if / when she does downsize, I'd similarly invest most of that money as well -- keep how ever many years worth of supplemental cash makes her comfortable, and then invest the rest. Again, though, my own orientation to this stuff is so different (very comfortable with risk and DIY) that it's hard to put myself in her shoes.