FILED PURSUANT TO RULE 424(B)(3) AND 424(C)
REGISTRATION NO. 333-65152

PROSPECTUS SUPPLEMENT NO. 2
(TO PROSPECTUS DATED JULY 30, 2001)

$930,709,000

STILWELL FINANCIAL INC.

LIQUID YIELD OPTION(TM) NOTES DUE 2031
(ZERO COUPON--SENIOR)
AND
COMMON STOCK ISSUABLE UPON CONVERSION OF THE LYONS

----------------

This document supplements the prospectus dated July 30, 2001 of Stilwell
Financial Inc. relating to the resale by certain holders of LYONs who are named
as selling security holders of up to $930,709,000 aggregate principal amount at
maturity of LYONs and the shares of common stock issuable upon conversion of
the LYONs.

You should read this prospectus supplement in conjunction with the
prospectus dated July 30, 2001. This prospectus supplement is qualified by
reference to the prospectus dated July 30, 2001, except to the extent that the
information in this prospectus supplement supersedes the information contained
in the July 30, 2001 prospectus.

The table of selling security holders beginning on page 43 of the
prospectus is hereby amended to add the entity named below as selling security
holder:

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT NUMBER OF
AT MATURITY OF SHARES OF
LYONS BENEFICIALLY PERCENTAGE COMMON STOCK PERCENTAGE OF
OWNED THAT OF LYONS THAT MAY COMMON STOCK
NAME AND ADDRESS: MAY BE SOLD OUTSTANDING BE SOLD(1)(4) OUTSTANDING(2)
----------------- ------------------ ----------- ------------- --------------
<S> <C> <C> <C> <C>

Deutsche Banc Alex Brown Inc..................... $85,250,000 9.16% 1,462,413 *
1251 Avenue of the Americas
New York, NY 10020
</TABLE>

After giving effect to the addition of selling security holders pursuant
to this prospectus supplement and all prior prospectus supplements, the table
of selling security holders reads as follows:

SELLING SECURITY HOLDERS

Allstate Life Insurance Company.................. $1,300,000 * 22,301 *
3075 Sanders Road, Ste. G6B
Northbrook, IL 60062

American Pioneer Life InsuranceCompany of New
York............................................. $ 80,000 * 1,372 *
6 International Drive, Ste. 190
Rye Brook, NY 10573-1068
</TABLE>

<PAGE>

American Progressive Life and HealthInsurance
Company of New York.............................. $ 80,000 * 1,372 *
6 International Drive, Ste. 190
Rye Brook, NY 10573-1068

Deutsche Banc Alex Brown Inc..................... $85,250,000 9.16% 1,462,413 *
1251 Avenue of the Americas
New York, NY 10020

First Union National Bank........................ $76,500,000 8.22% 1,312,312 *
8739 Research Drive
Charlotte, NC 28262-0675

GLG Global Convertible Fund...................... $16,800,000 1.81% 288,194 *
c/o GLG Partner LP
One Curzon Street
London W1J 5HB
England

GLG Global Convertible UCITS Fund................ $ 3,200,000 * 54,894 *
c/o GLG Partner LP
One Curzon Street
London W1J 5HB
England

GLG Market Neutral Fund.......................... $30,500,000 3.28% 523,209 *
GLG Partners LP
1 Curzon Street
London W1J 5HB
England

Global Bermuda Limited Partnership............... $ 1,500,000 * 25,732 *
601 Carlson Parkway, Ste. 200
Minnetonka, MN 55305

JMG Capital Partners LP.......................... $23,750,000 2.55% 407,417 *
1999 Ave. of the Stars, Ste. 2530
Los Angeles, CA 90067

JMG Triton Offshore Fund Ltd..................... $13,750,000 1.48% 235,873 *
1999 Ave. of the Stars, Ste. 2530
Los Angeles, CA 90067

Lakeshore International Ltd...................... $ 3,800,000 * 65,187 *
601 Carlson Parkway, Ste. 200
Minnetonka, MN 55305

Mainstay Convertible Fund........................ $ 8,450,000 * 144,955 *
c/o Mackay Shields
9 West 57/st/ Street
New York, NY 10019

Mainstay Strategic Value Fund.................... $ 300,000 * 5,146 *
c/o Mackay Shields
9 West 57/st/ Street
New York, NY 10019

Mainstay VP Convertible Portfolio................ $ 2,310,000 * 39,627 *
c/o Mackay Shields
9 West 57/st/ Street
New York, NY 10019
</TABLE>

<PAGE>

Merrill Lynch International Ltd.................. $ 10,000,000 1.07% 171,544 *
101 Hudson St.
Jersey City, NJ 07302

Morgan Stanley................................... $ 15,000,000 1.61% 257,316 *
1585 Broadway
New York, NY 10036

New York Life Separate Account #7................ $ 1,150,000 * 19,728 *
c/o Mackay Shields
9 West 57/st/ Street
New York, NY 10019

Tokai Asia Limited............................... $ 5,000,000 * 85,772 *
28th Floor, Alexandra House
16-20 Chater Rd.
Hong Kong

TQA Master Fund, Ltd............................. $ 2,000,000 * 34,309 *
405 Lexington Ave. 45th Floor
New York, NY 10174

TQA Master Plus Fund, Ltd........................ $ 2,500,000 * 42,886 *
405 Lexington Ave. 45th Floor
New York, NY 10174

Wilmington Trust, as owner trustee for the
Forrestal Funding Master Trust................... $ 70,000,000 7.52% 1,200,808 *
c/o Bank of America Securities LLC
One World Trade Center, 81st Floor
New York, NY 10048

Worldwide Transactions Ltd....................... $ 215,000 * 3,688 *
48 Par La Ville Rd. Ste. 778
Hamilton, HMII
Bermuda

ZCM Asset Holding Company........................ $ 250,000 * 4,289 *
One Chase Manhattan Plaza
New York, NY 10005

Zurich Institutional Benchmark................... $ 250,000 * 4,289 *
Master Fund Ltd.
One Chase Manhattan Plaza
New York, NY 10005

Any other holder of LYONs or future transferee,
pledgee, donee successor of any holder (3)..... $556,184,000 59.76% 9,541,002 4.34%
------------ ------ ---------- ----
Total............................................ $930,709,000 100.00% 15,965,754 7.27%
============ ====== ========== ====
</TABLE>
--------
* Less than 1%
(1) Assumes conversion of all of the holder's LYONs at a conversion rate of
17.1544 shares of common stock per $1,000 principal amount at maturity of
the LYONs. However, this conversion rate will be subject to adjustment as
described under "Description of LYONs--Conversion Rights." As a result, the
number of shares of common stock that may be sold may increase or decrease
in the future.
(2) Calculated based on 219,559,642 shares of common stock outstanding as of
June 30, 2001. In calculating this amount, we treated as outstanding that
number of shares of common stock issuable upon conversion of all of a
particular holder's LYONs. However, we did not assume the conversion of any
other holder's LYONs.

<PAGE>

(3) Information about other selling security holders will be set forth in
future prospectus supplements, if required.
(4) Assumes that the holders of LYONs, or any future transferees, pledgees,
donees or successors of or from any such holders of LYONs, do not
beneficially own any common stock other than the common stock issuable upon
conversion of the LYONs at the initial conversion rate.

The above table sets forth information as of August 6, 2001, based on
information supplied to us by the selling security holders named in the table.
The selling security holders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their LYONs since the date on which the
information was supplied to us and presented in the above table. Information
about the selling security holders may change over time. Any changed
information supplied to us will be set forth in future prospectus supplements.

----------------

INVESTING IN THE LYONS INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS--RISKS RELATED TO THE LYONS" SECTION BEGINNING ON PAGE 18 OF THE
PROSPECTUS.

----------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

----------------

The date of this prospectus supplement is August 7, 2001.
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/TM Trademark of Merrill Lynch & Co., Inc. /

</TEXT>
</DOCUMENT>