I wouldn't say anything to his dad. There are laws that protect us all - police would say we have a right to "an assumption of privacy." That means he can assume the fence is protection enough. My neighbor is almost 7' tall; if I didn't want him to see me, I'd have to add a couple rows of block on top of what is already there. My wife warned them when they moved in that I'm always out there in the buff. If he's ever witnessed me, he's never said anything.
There's a difference between whacking off in your own back yard and taking it to the streets as exhibitionists like to do - at the risk of being arrested.
The nudity shouldn't be your concern - even if he gets a boner. We're men, our cocks get hard; that's just the way it is. But you might let the him know his activities are plainly visible, that he might want find a spot that might shield him from neighbors when he feels the need to stroke one out.
What do you think, Readers?
Who should he talk to?