Investment advisor advocates are breathing easier after the Department of Labor announced Monday that it has pulled its current proposal on the definition of a fiduciary off the table. The agency will take up the issue in early 2012 and repropose a fiduciary definition after more industry input.

For now, the move provides a reprieve for advisors who were worried that the current proposals would encumber firms with costly restrictions on how they deliver advice to savers and investors.

Before the DOL temporarily pulled its proposals, it was embroiled in debates with members of Congress and the industry over whether the proposals were calibrated properly. Investment advisors worried that workplace sponsored defined contribution plans would come under regulation by the Employee Retirement Income Security Act of 1974, or ERISA.

In a statement Monday, the DOL said the reproposal is designed to ensure an open exchange of views, and protect consumers while avoiding unnecessary, burdensome costs.

“We have said all along that we will take the time to get this right to ensure that we provide the strongest possible protections to business owners and retirement savers in plans and IRAs,” Phyllis C. Borzi, the DOL’s Employee Benefits Security Administration’s secretary said in a statement.

Specifically, the DOL aims to make it clear that fiduciary advice is limited to individualized advice directed to specific parties. There were industry concerns that the proposed definition might cover routine appraisals. It was also unclear whether the rule applied to arm’s length commercial transactions, like swaps.

Industry advocates say the DOL made the correct move.

“One of the challenges we faced in this whole process was that the DOL could not really articulate an effective answer to the question ‘What is the problem we are solving for here?’” Dale Brown, president and chief executive officer of the Financial Services Institute said in a telephone interview.

The FSI, an organization that represents 124 broker-dealer members and 180,000 financial advisors that represents independent advisors, has been particularly vocal about where the proposed rules were headed. During the summer, it organized a grassroots effort in which advisors with memberships in the FSI sent more than 3,000 letters to President Obama, explaining how the proposed definition would impact their practices.

During a hearing last week before a subcommittee of the House Financial Services Committee, Bill Dwyer, chairman of the FSI described the problems with a DOL fiduciary standard along with one proposed by the SEC.

“The creation of a second competing and distinctly different fiduciary duty for particular types of client accounts will serve only to exacerbate the existing lack of consistency and transparency in our regulatory system,” Dwyer said during testimony.

Just last Thursday, Rep. Barney Frank (D-Mass.) wrote to Hilda Solis, secretary of the DOL affirming some industry sentiments. Frank affirmed that ERISA rules might need to be updated, but that it needed to be done in a way that does not adversely affect consumer choice, or options for municipalities and pension plans.