7.1 The PAIA Role & the Non-Core Services Boundary

7.1 The PAIA Role & the Non-Core Services Boundary

Quick Answer: A Person Associated with Investment Advice (PAIA) is anyone in a SEBI-registered investment adviser (RIA) who has client interface — partners, directors, employees, sales staff, relationship managers, by whatever name. The NISM Series XXV-B certification covers the non-core subset of PAIA: those who sell, onboard, and service clients. Core investment advice — personalized recommendations and portfolio construction — remains reserved for the registered investment adviser who holds NISM Series X-A and X-B.

The Legal Definition — Regulation 2(1)(r)

Under the SEBI (Investment Advisers) Regulations, 2013, Regulation 2(1)(r) (as substituted by the 2020 amendment, effective 30-09-2020) defines a PAIA as:

"any member, partner, officer, director or employee or any sales staff of such investment adviser including any person occupying a similar status or performing a similar function irrespective of the nature of association with the investment adviser who is engaged in providing investment advisory services to the clients of the investment adviser."

The attached Explanation is decisive for the XXV-B candidate:

"All client-facing persons such as sales staff, service relationship managers, client relationship managers, etc., by whatever name called shall be deemed to be persons associated with investment advice, but do not include persons who discharge clerical or office administrative functions where there is no client interface."

Two tests fall out of this:

1. Client interface test — if you interact with clients, you are a PAIA, irrespective of your job title.
2. Clerical exclusion — back-office staff with no client contact are not PAIA and do not need XXV-B.

Core vs Non-Core — The June 2026 SEBI Circular

The SEBI circular dated June 24, 2026 (HO/38/12/11(5)2026-MIRSD-POD/I/14660/2026), issued under Regulation 7 of the IA Regulations, formalised a two-track certification regime for PAIA:

• Core advisory PAIA — anyone who provides investment advice — must pass both NISM Series X-A (Level 1) and NISM Series X-B (Level 2).
• Non-core PAIA — sales staff, relationship managers, and similar staff who perform only sales and other non-core services — need only NISM Series XXV-B.
• Transition relief — PAIA who already hold X-A and X-B on the circular's date are not required to take XXV-B until their existing certification expires.

The circular frames XXV-B as an ease-of-doing-business measure: a lighter certification (50 questions, 60 minutes, 50% pass, ₹1,500 fee) calibrated to the actual role of non-core staff.

What a Non-Core PAIA May Do (Permitted Activities)

A Series XXV-B PAIA operating within the non-core boundary may:

• Assist with client onboarding — collect KYC, FATCA/CRS, and profile data.
• Distribute pre-approved product information — fact sheets, scheme documents, brochures prepared and approved by the RIA.
• Collect documents — identity, address, PAN, photographs, signed agreements and risk-disclosure documents.
• Conduct relationship management — schedule reviews, send statements, handle routine service queries.
• Provide administrative support — book appointments, maintain records, route communications.
• Explain factual product features — expense ratio, NAV, tenure, exit load — without recommending any specific security or action.

What a Non-Core PAIA Must NOT Do (Prohibited Activities)

The boundary is breached the moment the PAIA crosses from informing into advising:

• Provide personalized investment advice — "you should invest ₹5 lakh in this fund."
• Recommend specific securities — naming a particular stock, bond, or scheme as suitable for that client.
• Construct or modify a client portfolio — asset allocation calls are the RIA's job.
• Charge an advice fee — advisory fees flow only to the registered investment adviser under the IA agreement.
• Sign the investment-advisory agreement or suitability recommendation — the registered adviser owns that sign-off.
• Hold out as an independent adviser — the PAIA acts on behalf of the RIA, not in a personal capacity.

Why the Boundary Matters

The boundary protects three things at once:

1. Investor protection — a client who receives a "recommendation" from an uncertified salesperson has no assurance the recommendation is suitability-tested.
2. Fee separation — advisory fees are regulated and must map to advice actually given by a registered adviser; sales commissions are product-distributor economics, not advice fees.
3. Regulatory liability — a PAIA who advises without X-A/X-B exposes both the individual and the RIA to SEBI enforcement under Regulation 7.

Permitted vs Prohibited at a Glance

The exam will repeatedly test this table in different wordings. The mental rule is simple: if the action requires a suitability judgment about this client, it is core; if it is administrative or factual, it is non-core.