Smart people do stupid things, especially when it comes to managing money.

The former chairman of a major company held $200,000 of Krugerrands in his IRA rollover account, even though gold coins produce no income to shield from taxes.Another executive with a $450,000 annual base salary didn't know publicly traded bonds could be sold prior to maturity.

A retiree of another major firm took the funds from his benefit plans in a lump sum, forgoing the option of 10-year averaging.

E. Deane Kanaly, chairman and chief executive of Kanaly Trust Co., Houston, says it's amazing how many executives can't manage their personal finances. Corporate finance is a lot easier than personal finance, he claims.

The above examples are all taken from "The Kanaly Concept," (220 pages. 1986, Kendall/Hunt Publishing Co., Dubuque, Iowa. $20). Mr. Kanaly says he wrote the book to help untold numbers of Americans who are cheated by unlicensed financial managers and counselors who almost flaunt their conflicts of interest.

"Consider the widow whose banker advises her to put the insurance money in CDs - in his own bank of course - instead of in a carefully designed investment program," he says, adding that trust departments should be separated completely from banks to avoid such "terrible conflicts of interest."

A Senate committee estimated U.S. citizens lose $91 billion a year because of poor financial advice. Mr. Kanaly says the biggest hazard faced by people who come into substantial sums of money is the predators who purport to be there to help with management or decisions - or with both.

"Millions will inherit billions in the next several decades," he points out. "It is a revolutionary socioeconomic phenomenon never before witnessed."

But at the same time, financial counselors aren't being trained, and universities aren't offering financial planning courses. When it comes to finances, Mr. Kanaly says, Americans are ignorant.

The costs of this neglect, in terms of money and human suffering, are staggering. "There is a close connection between personal health and

financial health," Mr. Kanaly says.

"You go to the dentist every six months. And you go to the doctor once a year for a checkup. You should also visit your financial counselor at least once a year for a financial checkup," he said in a recent interview.

A financial counselor, he says, should be similar to a general practitioner. "Know the difference between the doctor and the pharmacist who is selling the drugs," he cautions.

"Consider the Certified Financial Planner who conducts free seminars as a vehicle to tout specific investments, ostensibly the 'best' available in today's market, but in fact securities, syndications or tax shelters which yield the highest commissions to the seller at the moment."

Mr. Kanaly recommends state or local licensing of financial planners and counselors, as well as required classes in personal finance for every college student.

"We should equip people to understand the effects of selling a business and of retiring, realizing that there is an unfortunate pattern that most people fall into when they inherit money, retire or sell a business. Most of these people have no experience dealing with liquid assets. They become the victims of the community at large, which oftentimes does not act in their best interest in selling products and services," he says.

"When an M.B.A. places his IRA in Krugerrands, it is clear that the educational process is incomplete," he says.

Mr. Kanaly says the aggregate of assets held in trust by trust institutions in this country would be measured in the trillions of dollars, ''if we could ever get together and measure it. Trust assets would dwarf the national debt."

If Americans are ever to get their financial affairs in order, he says, it must start at the household level. "We can't wait for the politicians to straighten out the mess."

He hopes, however, that the tax shelter business will go down the drain if tax reform legislation is enacted.

"Tax shelters in oil and real estate have been the biggest waste of money and talent. Without them, billions of dollars will be freed up for productive investment," Mr. Kanaly says.

What this country needs, he says, is well-trained, professional financial counselors, instead of "self-styled financial planners whose single credential may be little more than a desk in a brokerage office or a shingle on the door."

Financial planners must customize their services to meet individual needs, he adds.

"What you do with your money depends on whether you have kids to put through college or an elderly parent in a nursing home to support," he says.

Financial decisions also must be made in the context of the personal

financial life cycle, which progresses from the formation stage to orientation, survival, accumulation and preservation of assets, he explains.

Finally, he adds, it is important to understand the "megatrends" affecting our society, including the shift to a service economy, the new federalism, the retreat from the notion that more is always better and the increasing interdependence of the world economy.

"The Kanaly Concept" is essential reading for anyone hoping to achieve and maintain excellent financial health.

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