Christopher ‘Kit’ Sechler – John Hancock Investment Management 

If the devil is in the details, there was more than one hiding in the fine print when the U.S. Securities and Exchange Commission issued its so-called Fund of Funds rule in late 2018.  

So observed Christopher “Kit” Sechler in his role as chief legal officer for John Hancock Investment Management. As this amiable lawyer clarifies, he’ll never suspect evil intent at the SEC. He explains that these regulatory agencies don’t always fathom unintended consequences when tweaking or overhauling the rulebook. 

Christopher ‘Kit’ Sechler | Secretary and Chief Legal Officer | John Hancock Investment Management

“Much of what we do in financial services is interconnected,” Sechler explains. “Mess with this part, and you find it’s connected to several other parts, setting off a cascading effect that may not be readily obvious.” 

In the Fund of Funds case, he explains that in the interest of protecting investors, the SEC would have made it harder for companies to offer these products, which form the backbone of many types of retirement accounts, where buying into one fund that invests in others allows more exposure to multiple types of investments, with a target date for retirement in mind. 

While there’s risk involved, Sechler retorts that it’s a controlled risk. Furthermore, most retirement plans are geared towards a  target date for retirement, and while the markets can be prone to chaos—think the Great Recession and COVID-19—he says the existing arrangement generally works well. 

Nevertheless, Sechler conceded that some changes might have been in order, and John Hancock—whose business model is built on complex investment strategies—had input to share. The firm did so in a detailed 40-page letter that Sechler and other John Hancock C-suiters and outside experts presented to the SEC. Accompanied by the firm’s president and chief compliance officer, Sechler met in Washington with the agency to discuss the unintended consequences of the proposed rules.  When the final rules came out, the SEC amended many provisions to address some of those consequences and cited the letter for its persuasive reasoning. 

“This achievement was a significant accomplishment for me and my colleagues, and I feel privileged to have played a crucial part in advancing the industry,” Sechler tells Vanguard from his Boston office in January. “The SEC’s heart is in the right place. They really believe they’re doing the right thing, but sometimes they don’t understand all the nuances and can get some details wrong.” 

Collaboration over confrontation 

With much pending at John Hancock that needs SEC approval, Sechler anticipates his relationship with the firm’s chief regulator will only grow. But there’s no point in going in with all guns blazing, he says. This isn’t the Wild West, and he’s no cowboy. 

He’d rather be seen as a specialist in matters where legal and financial converge and as someone ready with constructive criticism that, most recently, concerns another SEC proposal. This one’s about a little-understood but very consequential practice known as swing pricing.  

So what is it? Well, it’s when a fund manager adjusts net asset value to account for expenses of inflows or outflows of investor orders. This way, a fund can pass the costs associated with trading to first movers to protect shareholders from dilution and reduce the threats to financial stability.  

To do this, however, you need to know what those inflows and outflows are much earlier in the day.  To accommodate that need, the SEC proposed a hard cutoff time to receive orders for buying or selling mutual funds. According to Sechler and such sources as Traders Magazine and the Investment Company Institute, this would affect all traders but threaten most investors of modest means. 

“The problem the regulator is trying to address is that in times of severe market stress, big institutions may move out of mutual funds more quickly than retail investors who don’t act as quickly,” Sechler adds that there are other ways to address this concern. “The proposed rule could make it harder for the moms and pops to invest in mutual funds on equal footing with the institutions. As an industry leader, we must explain what’s at stake.” 

Tapping the Asian market 

Sechler will be monitoring the rules on that front in addition to his vigilance on other matters. John Hancock is a subsidiary of Canadian-based Manulife Financial committed to global growth, and he’s helping sell funds in Asia. Manulife has an Asian presence, while John Hancock does not.  

Sechler’s bringing together teams in Boston, Toronto, Singapore and Hong Kong to unite the John Hancock and Manulife teams in international fund offerings. It’s a first for the John Hancock team—and further vindication of the advice Sechler got when pondering his career while attending Boston University School of Law during the latter half of the 1990s. 

“Be a 1940 Act lawyer,” he recalls being told. “You’ll always have a job in this city,” advice that rang true as the Great Recession caused hiring freezes and furloughs at many law firms. 

Upon some research, Sechler realized his mentor referred to the Investment Company Act of 1940, which sets out the rules for managing mutual funds. Boston also seemed the perfect place to be such a lawyer, this city being both the cradle of liberty and mutual funds. Though born and bred in the Midwest, Sechler was in his personal promised land.        

He got his start as an associate at Dechert LLP, a financial services law firm, and six years later, he took an in-house role at Eaton Vance, an investment house that’s since become part of Morgan Stanley. In 2009, as a seasoned 35-year-old, he opted for John Hancock, and 15 years later, Sechler still likes where he earns his livelihood. 

“It’s a great company, and we’re very concerned with complying with the rules,” he says. “We’re not cowboys. You don’t last 160 years that way.” 

Now a spry 50-year-old who relishes outdoor activities, Sechler says he’s in the prime of his working life and with so much to do at John Hancock, the pressure is always on. He’s got complex rules and regulations to interpret to his colleagues. He’s the primary liaison with the board of directors and fosters department communications.  

“Our goal is for our customers and shareholders to succeed,” he says. “When they do, we do.” 

And for young lawyers interested in finance, Sechler advises them to follow the advice he got when his counterparts sent out one resume after another. While no job ensures longevity, some offer better odds against downsizing. 

“Be a mutual funds attorney,” he says. “Once you start down that path, you can keep going, as I did.”   

View this feature in the Vanguard Winter III 2024 Edition here.