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.”