Daren Blonski of Sonoma Wealth Advisors: “Investing During The Pandemic; What Should I Do With My Money Considering All of the Volatility and Uncertainty Today”

I have been investing in the stock market since I was in my early teens and I figured a move into the financial services industry might be a good fit for me. My natural curiosity for the markets, what makes them work, their puzzles and complexities remain fascinating to me. Understanding the mathematics and psychology of the markets is a never ending pursuit

As a part of my series about “Investing During The Pandemic,” I had the pleasure of interviewing Daren Blonski, co-founder and managing principal of Sonoma Wealth Advisors.

Daren Blonski, CFP®, AIF® is the co-founder and managing partner of Sonoma Wealth Advisors in California. With a master of arts in psychology from Sonoma State University, he’s an educator and coach, operating in the realm of financial planning and is deeply connected to helping clients take their lives to the next level. Daren is a CERTIFIED FINANCIAL PLANNER™, a Certified Retirement Planner Specialist™, an Accredited Investment Fiduciary™, a Certified Retirement Planning Counselor™, an Accredited Asset Management Specialist™ and a Smartvestor Pro™ with Dave Ramsey.

Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

I began working as a financial advisor after my first career as an executive in the learning and development business conducting leadership and team development. My career in the learning and development industry required a lot of travel, so when having a family became a priority, I looked for something else to do.

I have been investing in the stock market since I was in my early teens and I figured a move into the financial services industry might be a good fit for me. My natural curiosity for the markets, what makes them work, their puzzles and complexities remain fascinating to me. Understanding the mathematics and psychology of the markets is a never ending pursuit.

When I’m working with my clients, I find that helping them is more about the psychology of their decisions than it is about the actual assets in their portfolio. It turned out my background in industrial psychology and organizational behavior translated seamlessly into a career helping clients retire and achieve their goals and dreams.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

A few years ago, I volunteered for a local fire department as a firefighter. Fire fighting is something that is in my blood, since my father spent his career working in the fire service. I paid my way through my undergraduate degree working for UC Davis Fire Department and as a hotshot for the U.S. Forest Service. It’s more difficult to participate now because it takes time away from my kids and a demanding career. However, it’s something I really enjoy and plan to volunteer again when the kids are older.

In the fall of 2017 Sonoma County was severely threatened during a massive firestorm. Leading up to 2017, I had been less active with the Schell-Vista Fire Protection District, but I knew my experience and instincts would kick back in, so I made the decision to help fight the fires.

Along with the other firefighters, we spent the better part of a week chasing our tails from fire to fire. The town and surrounding areas sustained significant damage, but we were able to save many homes and businesses as a result of our efforts. In fact, three days into the fire, I found myself stationed at the house of one of my clients, as the engine I was assigned to spent a night defending their home from the fire. That night the fire took multiple runs at their home. It’s one thing to defend a clients’ assets against volatile markets, but it’s another thing entirely to defend clients’ homes, their families and their personal possessions.

This experience taught me that helping people with their finances is akin to protecting their homes and families. No matter the circumstance, I find great purpose in taking care of my clients.

This experience was certainly one of the most memorable experiences of my career.

Are you working on any exciting new projects now? How do you think that will help people?

When the Covid-19 pandemic hit, my firm, Sonoma Wealth Advisors, focused more on creating a virtual office so we could assist our clients and their needs without any interruptions. We started weekly open office hours, Zoom appointments, enhanced our email communications and started utilizing YouTube and podcasts to communicate with our current and potential clients.

Some people and experts are saying that things might go back to the way they were, but the reality is that they likely will not in the near term. Now is a time to embrace technological change because using technology will become more important than it has ever been. When a crisis arises, people’s needs tend to accelerate.

The pandemic is going to force all of us all to re-evaluate what ‘essential human interaction’ really means for us. The winner in that evaluation process will be technology that enables more direct human interaction.

Communication with your clients is critically important to lower their fears about the market and what might occur in the future. Adopting more technology means that people have many more options to learn about how they might be impacted.

I have partnered with multiple other professionals to update the community on the ever changing conditions via YouTube. We currently have two channels available — one is called Small Business 2.0 where a local mortgage broker and I interview leaders on how their business is shifting as a result of the pandemic. On the second channel, a real estate agent, attorney and I speak about various financial topics. For a lack of a better name we call it the Sonoma Braintrust. With the vast shifts taking place across many industries, we hope that it’s a great tool for educating the public as we all work through the crisis together.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

I am a big believer in the power of an aligned team. I have been fortunate enough to connect with people along the way who have helped support and build my vision. Rose Rosen, my client service team member, has been with me for nearly nine years and has supported our clients through multiple transitions. I owe a huge debt of gratitude for my success to her.

When an advisor makes the decision to leave a broker-dealer, it is no small task. The brokers don’t like advisors leaving and make the process very difficult. During the process you have to resign and call your clients to announce that you’ve left the firm. It’s a huge leap of faith that your clients appreciate you and will follow you to your own firm.

When Rose decided to join me when I left the broker dealer world to become a fiduciary, she took on a huge risk. When you follow the person you work with, there is no guarantee that the business will be successful. It’s a big risk, but I am grateful she chose to join me in creating a vision where we’re able to serve clients in their best interests and not beholden to the broker dealer sales pitch.

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

Anxiety comes from detachment to the moment. When people focus on either the future or the past, they can find themselves feeling anxious.

When people read the news, they are reading articles about what happened in the past and what experts believe will happen in the future. Focusing on the past or future requires that our minds construct stories based on limited facts.

What happened in the past depends often on each person’s experience and how they relate to the current news, which can often be alarming or upsetting. The Covid-19 pandemic has many of us glued to the TV and social media trying to make sense of it all. This creates anxiety because nobody knows what will happen in the future. Sometimes the best strategy is to turn it off and take a mental break. The situation will resolve itself. If it’s not something you have control over, refocus your energy.

All that exists is the present. One way we can alleviate ourselves from the recent anxiety is by reconnecting with the present. Take a walk. Turn off your social media. Garden. Exercise.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

It’s impossible to give good advice without knowing more about one’s individual financial situation. As a general principal, it’s best to continue with your investing strategy as you did prior to the market volatility from Covid-19. While future changes could warrant a shift in strategy, it’s best to maintain a well diversified investment portfolio to lower the amount of risk.

Don’t get me wrong, it’s very difficult to invest when the markets are volatile as fear is rampant. Yet, when others are fearful, investors can find some of the best investing opportunities. Stay the course.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

Chasing trends with the money in your portfolio is a recipe for losing money unless you’re well-trained. It is very difficult to chase sectors. Usually by the time the retail investor finds their way to popular sectors, the institutions are already shifting their investment because the trend is ending. The traders even have a name for it — they call the momentum chasing investors the “Johnny-come-latelys.” The cards are stacked against retail investors taking bets on sectors. Even the experienced ones take a lot of losses prior to taking big gains, so unless you’re prepared to really learn the markets, it’s not a good idea to play sector roulette.

It’s best to have a low cost, diversified portfolio and stay the course regardless of the trends.

It’s true the technology and healthcare sectors might perform well, but placing all your bets on these two sectors could be too risky. If they fail to generate good returns, you could potentially lose a lot of your hard-earned money.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

The S&P 500 is made up of 11 sectors. If you’re going to look for sectors to perform well, your investing time horizon should be more long term. I can only recommend that investors remain well diversified, especially if they plan to retire soon. It’s hard to predict what sectors will perform well when the economy fully reopens.

Are there alternative investments that you think more people should look more deeply at?

When markets are reacting to news the way they currently are, managed futures can play a role in an investor’s portfolio. We like managed futures for protection from the downside and for potential growth in markets that are volatile. Be prepared to dive deeply into the research and understand what you’re investing in prior to investing.

Investing in alternative investments such as commodities, precious metals, real estate, startups, options, hedge funds, private equity and venture capital can reduce volatility and your risk level. These assets tend not to correlate to the stock market, so when the market is volatile or experiences large swings and losses, these assets can provide diversification.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

I would stay with the strategy that the Oracle of Omaha, Warren Buffett, the CEO of Berkshire Hathaway, recommends. Find a low cost, well diversified index fund and keep dollar cost averaging. I’d also recommend that he/she should keep in mind that markets will go up and down because that is what markets do.

Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non-intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

Here are five semi non-intuitive rules that I hope my kids will follow when they are adults:

First of all, diversify your investments. People often over allocate their assets into investments they ‘believe’ will workout, only to find out that they don’t. Don’t trust your investment judgement and diversify instead.

Second, invest in low cost broad index funds and ride the waves of the markets. Start when you are young and save often.

Third, avoid financial sales people. Find a fiduciary advisor to work with if you’re going to seek help with your finances.

Fourth, carrying debt is a terrible idea, even if the interest rates are low. Pay it off and do so aggressively. You really can pay off your debt if you focus on it.

Fifth, always, always pay off your credit cards if you’re going to use them. You get in trouble when you start carrying a balance on your credit card.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Things turn-out the best for the people who make the best of the way things turn-out.’ John Wooden, former basketball head coach at the University of California, Los Angeles.

Life happens to us all. We don’t get to control what happens to us, we do get to control how we respond. None of us could have stopped Covid-19 and how it’s impacted our lives, but we have the choice to decide how we respond and make the best of the changing world.

All businesses will be changed to some degree. We have the opportunity to engage in the changes and make them an edge in growing our businesses.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

It’s mind boggling that our schools don’t require basic finance courses.

If I could enact one small movement, it would be to make personal finance classes part of the curriculum, starting in elementary school. Our schools need to focus on teaching applicable everyday skills such as budgeting, learning the value of compound interest and saving money to avoid accruing debt.

With millions of Americans sadly suddenly unemployed in this country, these individuals and their families are all being largely impacted. Just maybe, if more students had learned about the wisdom of emergency funds in school, it would make a difference in millions of lives. This is why saving money on a regular basis in an emergency fund is crucial, because you never know when a wildfire, hurricane or pandemic will occur and impact your livelihood.

Thank you for the interview. We wish you only continued success!