Deputy Labor Secretary Patrick Pizzella.

Although "fiduciary" is not a word used in everydayconversation, it's a term every investor would do well to learn."Fiduciary" principles — derived from the Latin word for "trust" —have become a mainstay of modern law and society.

Having debuted in written law during the time of the Romans andgained prominence in English common law, today fiduciary principlesare called upon to govern relationships of trust spanning manysectors, including retirement plans and health care, charities,family relationships and guardianships, corporations andemployment, bankruptcy and trusts, and the list goes on.

A fiduciary relationship requires the utmost allegiance — whatSupreme Court Justice Benjamin Cardozo famously described as "thepunctilio of an honor the most sensitive."

Related: Borzi: DOL abandons its statutory missionto protect retirement savers

On June 29, the Department of Labor issued a proposal tostrengthen and harmonize requirements for fiduciaries that provideinvestment advice to participants in employer-sponsored retirementplans and individual retirement accounts (IRAs).

In its proposed Improving Investment Advice for Workers &Retirees Exemption, the department furthers the Trumpadministration's commitment to putting workers first bystrengthening participant protections while preserving investmentadvice options in privately sponsored retirement plans. This effortwill help empower Americans to make independent and informedfinancial decisions, save for retirement and build individualwealth.

The department's proposal, which authorizes a wide variety ofbeneficial advice relationships while protecting retirementinvestors from abuse, is necessary in light of the many changes tothe retirement market in recent decades, including changes to theways retirement savers access investment advice. In the lasthalf-century, we have seen a significant shift in the retirementlandscape as workers now have more control of and responsibilityfor their retirement savings.

In 1981, about 64% of all pension plan participants had a"traditional" defined benefit pension. By 2017, this number wasonly 25%. Instead, defined contribution plans such as 401(k)s havegrown in popularity, and in 2019, retirement savers had a total of$7.4 trillion invested in these plans.

The explosive growth in 401(k)-type plans and IRAs means thatworkers are increasingly contributing to and managing their ownretirement savings.  While this increased control providesretirement savers with greater flexibility, there is also potentialfor abuse. In response to this concern, the Department's proposalrequires advisors to base their investment recommendations,including recommendations to roll assets out of 401(k) plans, onthe best interests of workers — and not on the best interests ofthe advisor.

Under the Department's new exemption, investment professionalswould be required to tell their retirement investor customers thatthey are acting as fiduciaries when making investmentrecommendations, so that all parties are clear about the nature oftheir relationship. And, as fiduciaries, advisors would have toadhere to Impartial Conduct Standards.

These include the requirement that investment advice be in theparticipant's best interest; a reasonable compensation standardthat requires execution of a customer's trades at the mostfavorable terms reasonably available; and a prohibition onmisleading statements about investment transactions or otherrelevant matters.

These protections are consistent with the requirements of otherregulators such as the Securities and Exchange Commission, and liketheir standards, are derived from fiduciary principles. In supportof these Impartial Conduct Standards, the Department's proposalwould also require disclosure and efforts to mitigate any conflictsof interest when providing investment advice to plans andparticipant investors.

This may not be the first time you've heard of a LaborDepartment fiduciary rule. The Obama administration's 2016 ruleresulted in many participants being left without access toaffordable financial advice.

At that time, the House and Senate voted to block the rule fromtaking effect; but President Barack Obama vetoed the jointresolution. The rule was ultimately vacated by a federal court.

The Department's recent proposal avoids problems created by the2016 rule while providing much-needed protections for retirementsavers and appropriate access to investment advice options.

The Depression-era bank robber Willie Sutton, who escaped fromprison three times and amassed a small fortune, reportedly was onceasked why he robbed banks. Sutton replied, "Because that's wherethe money is."

With nearly $18 trillion in defined contribution plans and IRAsin 2019, retirement savings are where the money is. TheDepartment's proposal will ensure that the high standards expectedof a fiduciary — a designation that has held significance since thetime of the Romans — are carried through the 21st century.

Patrick Pizzella is the deputysecretary of the U.S. Labor Department.