It appears that having an elite financial certification isn’t a guarantee that the holders need never face personal financial woes themselves. Of all the categories of conduct that will land a certified financial planner before the CFP Board of Standards’ Disciplinary and Ethics Commission, bankruptcy currently ranks number one.

There were 30 cases that came before the board from 2007 through 2010, ahead of other categories such as misrepresentation, criminal conduct, forgery, and misleading advertising. It’s not a big number, given that 62,000 planners hold the CFP. But it may surprise some people, given the rigor of the exam (just a little more than half pass it.) And the number of bankrupt CFPs who come before the commission is increasing, says Edward Mora, the commission’s new chair. Half of the bankruptcy cases occurred just last year.

“Fundamentally, we expect CFP certificants to be able to handle their own finances effectively if they’re going to be advising others. That being said, there are very unique situations that come up that might be unavoidable,” Mora said. “Sometimes we feel that yes, the certificant could have done more to avoid bankruptcy. Other times it’s really completely unavoidable.”

The bankrupt CFPs generally fall into three categories: medical expense problems, the sluggish economy, and poor financial management habits. Mora says the economy is at the root of most of the cases that come before the commission. “A lot of times it relates to certificants that might have branched into real estate-type investments that went under and pulled them under. I recall that as being one of the central themes in these cases. It’s rare that it’s a business bankruptcy per se, like their practice going under. It’s really mostly personal,” he says.

The range of sanctions against a CFP in bankruptcy can range from a dismissal with caution to a censure, a suspension or a revocation of the certification, depending on the facts of the case, Mora says. The CFP board learns about bankruptcy filings from the certificants themselves; they are required to reapply every two years, and the question of bankruptcy filing is one of many the applicant must address.

Bankruptcy is one of about a half-dozen grounds for denying a mark to applicants who seek the CFP for the first time. Any bankruptcy filing within five years of an application for the CFP is a presumptive bar to its approval, Mora says. “Maybe they were in a different industry, a real estate brokerage, and they were impacted dramatically by the downturn in economy, and now they want to become a CFP certificant. We look at those very carefully,” he says. “We want to understand and make sure -- Was it the economy or was it activity by the certificant? -- before we allow a candidate into our ranks.” A denial can be appealed to the commission.

The CFP board updated its fitness standards for mark applicants and registrants last June. Other presumptive bars include having more than one judgment lien; revocation or suspension of a non-financial professional license, unless the revocation is administrative in nature; suspension of a financial professional license, unless the suspension is administrative in nature; a felony conviction for non-violent crimes (including perjury) within the last five years; and a felony conviction for violent crimes other than murder or rape that occurred more than five years ago.

Having two or more personal or business bankruptcies will always bar an applicant from obtaining a CFP.