Labor Secretary Thomas Perez on Tuesday revealed the DOL's much-anticipated redrawn fiduciary standard, taking aim at conflicts of interest by brokers that, he said, are costing unaware American workers billions in lost retirement savings.

The new rule, he said, is designed to protect investors while offering “considerable flexibility” in how financial advisors get paid. It's about providing “guardrails but not straitjackets,” he said.

Advisors, he said, should be able to do well “in their bottom line,” even with the new standard, which was approved by the Office of Management and Budget after a 50-day review but is still subject to a public comment period and hearings.

The changes would extend protections to the $7.4 trillion held in IRA accounts, a common vehicle for retirement savings that barely existed when the original rules were issued 40 years ago.

Brokers would still be allowed to earn sales commissions and other fees paid by mutual funds as long as they sign a new “best-interest contract exemption” with their investors, Perez said.

“It’s a straightforward agreement so you know you’ll get advice on investing your retirement savings that puts your interests first,” Perez said in a blog post that accompanied the DOL's announcement.

The best interest contract exemption, the DOL said, would be used by advisers who make investment recommendations to individual plan participants, IRA investors and small plans.

It would require those advisers and their firms to formally acknowledge their fiduciary duty and enter into a contract in which they pledge to give advice that is in the customer's best interest and to make "truthful statements about investments and their compensation.”

So long as they enter such contracts, the DOL said, those advisors can then receive common types of fees that fiduciary advisers could otherwise not receive under the law.

That includes commissions, revenue-sharing payments, and 12b-1 fees.

Also, he said, the new standard “would not apply to brokers who just take direct orders from customers and would not limit access to financial education.”

Moreover, call centers, he said, could “continue to provide financial education.”

The labor secretary has spent much of this year trying to rally support for stricter broker rules as Wall Street lobbyists lined up in opposition to the Obama administration’s plan.

He noted Tuesday that the agency withdrew its orginal proposal in 2010 and "went back to the drawing board."

"Since then," he said, "we’ve worked with industry, consumer groups, retirement advocates, academics, and the public to gather feedback and rework the rule."

Also read: Clear lines of support, opposition for fiduciary rule

In a recent speech to a group of consumer advocates, Perez said that one of his top priorities is to make brokers who manage retirement accounts put their clients’ interest ahead of their own. He said current rules enable biased financial advice that jeopardizes workers’ nest eggs.

Perez in that appearance likened the situation with retirement savings to the sale of complex mortgages in the run-up to the housing market collapse.

“This is a first cousin of what I saw in the mortgage space,” Perez said at the Consumer Federation of America event in Washington. “Folks did not know they were victims because they went to someone they thought they trusted. It turned out the trust may have been misplaced.”

Perez is battling a phalanx of industry lobbyists as he seeks to eliminate what the Labor Department calls conflicts of interest that cost investors billions of dollars annually.

Labor’s proposal, years in the making, would require brokers to put retirement savers’ interests first, a standard known as fiduciary duty. It would apply to retirement accounts such as IRAs and 401(k)s, which now hold more than $11 trillion.

Perez said some brokers sell inappropriate investments to retirement savers with “compound fees and costs that can linger like a chronic illness.” According to Obama administration economists, investors lose as much as $17 billion a year to inferior products and “backdoor fees.”

Also read: NAPA’s deep reservations about DOL’s broker rules

Under current rules, brokers can sell any product that is “suitable,” meaning it fits an investor’s needs and tolerance for risk. White House officials said that compensation model and the suitability standard allow brokers to recommend products that net higher fees or commissions without yielding better returns for investors.

Wall Street groups and brokers say the rule will impose added costs that will prompt brokers to drop client accounts with less than $50,000 of assets, leaving those investors to manage their own savings. Those investors pay less under the current business model than they would if brokers were required to work under a fiduciary duty, the industry says.

The proposal has been under reviewed by the OMB for a little under two months. It was expedited after President Obama endorsed the DOL's approach in a speech at AARP’s headquarters on Feb. 23.

Adoption of a final rule could take six months or longer, according to RBC Capital Markets, providing plenty of time for congressional scrutiny and industry lobbying.

Now that the OMB review is complete, a 75-day public comment period will commence. Challenges are expected from Wall Street, in the court of public opinion as well as potentially in the legal realm.

"The process is far from over," Perez told reporters Tuesday. "We're going to conduct a very careful, methodical review."

Links to the proposed fiduciary rule, prohibited transaction exemptions, economic impact analysis and other materials are available at www.dol.gov/ProtectYourSavings/.

Bloomberg News contributed to this report.

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DOL broker rule offers &lsquo;guardrails, not straitjackets&rsquo;

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DOL broker rule offers ‘guardrails, not straitjackets’