It seems as though the entire world has taken to analyzing andmonitoring the millennial generation. And rightfully so.

According to The Hartford, there are between 80 million and84 million millennials, and in less than ten years they willcomprise 75% of the U.S. workforce. Hartford's researchshows millennials are more interested in saving forretirement at a young age than any generation before them datingback to the Great Depression.

A number of surveys cite increased participation inemployer-sponsored retirement plans as a major component of thistrend, and while that certainly is a factor, it is hardly the onlydriving force behind millennials' willingness to save.

In fact, it could be argued that the auto-enrollment provisionsadded to most 401(k) plans are responsible for drivingthe increased participation rate in employer plans as opposed toconscious saving activity. However, just because millennials areinterested in saving for retirement does not necessarily mean theyare doing it properly.

Understanding the millennial mindset

So what is it about millennials that makes them moresavings-conscious than previous generations?

Theories abound, but one constantly cited element is theircollective experience from the 2008 Great Recession.

Further, millennials are the most indebted generation inhistory, carrying significant student loan debt as they enter theworkforce. With these factors in mind, it's not difficult tounderstand their more conservative approach to finances.

Below is a snapshot of what the world looked like when each ofthe five generations currently existing in the workforce werebetween the ages of eight and 22 years old:

Millennial views have been shaped by political, global andcultural events. (Image: Kevin Boyles)

The rapid pace of political, global and cultural eventsunfolding for millennials leaps out immediately. Add in the massiveexplosion in internet, technology, smart devices and socialnetworks, and there is a reasonable foundation for understandingwhy most millennials are radically different in their perceptionsthan prior generations.

Now look at what the Dow Jones Industrial Average did duringeach corresponding year:

(Source: Macrotrends LLC, “Dow Jones 100 Year HistoricalChart”)

Since 2000, the millennial mindset around money — everythingfrom saving it to taking out loans — has been shaped byunprecedented changes in the global economy.

Millennials have a variety of concerns about saving forretirement, and often they miss out on tax-preferred savingsvehicles like Roth IRAs. (Photo: istock)

Addressing millennials' savings concerns

A Wells Fargo study found that 42% of surveyedmillennials say that debt is their largest financial concern —and they are making strategic moves to avoid it. The percentage ofmillennials who already own traditional and Roth IRAs is roughlythe same as the national average for all households at morethan 40%.

According to the Investment Company Institute (ICI), 20% of allRoth IRAs are now owned by millennials. Such significantparticipation rates show a generation exhibiting a high level ofsavings awareness.

But there is some bad news, as well.

Millennials tend to shun professional financial advice and trustfinancial professionals and institutions much less than priorgenerations did. As a result, Wells Fargo found they tend to relyon advice from peers and family as opposed to professional sources.

Millennials being more willing to save money than priorgenerations is certainly the “glass is half full” piece of theequation. Doubtless, not much additional analysis or color needs tobe added to this fact — millennials are motivated to save.

The issues on the “glass is half empty” side of the equationabound but are certainly not insurmountable. In order to overcomethese trust issues, advisors and those in the financial servicesindustry need to consider a different approach and a completely newway of thinking.

Three issues to address

In order for financial experts to tackle millennials' savingsconcerns, it's important to understand the concerns they are facingin their battle to save.

The first is the erroneous belief that retirement is the onlyobstacle on the mind of the millennial saver. In fact, millennialsare beset and besieged by the competing savings priorities priorgenerations were simply not taught to incorporate into their savingplans. Things such as paying off college debt, assisting elderlyparents outliving their own savings, college saving for their kidsand saving for health care needs, both prior to and in retirement,are vying for their attention.

Advisors need to recognize this and approach their savings goalswith the understanding that retirement is not millennial's mainpriority, and in fact there are many needs taking precedent overit.

The second issue is millennials are very entrepreneurial, so theidea that employer plans are a one-size-fits-all solution is notquite right. The percentage to total number of independent workersin the millennial generation is higher than in any other. Somestudies show millennial independents as already makingup 30% of the independent workforce.

Getting millennials who do have access to employer-sponsoredplans to better leverage their advantages is still a greatapproach, but it needs to be a component of a larger strategyinstead of the sole one.

Lastly, a large number of millennials are eschewing savinganything for retirement directly, preferring to put their oftenrelatively meager available savings dollars into cash equivalents,or what is often referred to as “rainy day funds.” This robs themof the opportunity to save in tax-preferred 401(k) or IRAretirement vehicles. As a result, many are not realizing thepotential benefits of their generational penchant for savingmoney.

At a minimum, advisors should teach these young savers to investtheir “rainy day” dollars into Roth IRAs instead of dumping theminto savings accounts. This way, they can still have access totheir contribution dollars at any point should an immediatefinancial need presents itself. By opening these Roths soonerrather than later, millennials also start the five-year Roth clock,so the sooner these young savers put a few dollars in, the soonerthey can realize the full benefit of the Roth IRA.

Closing the gap

While millennials are philosophically ahead of the curve onsaving for retirement, they need more guidance than any priorgeneration. They are paying down debt from a number of sources, sotheir available saving dollars are often somewhat small, and onlythe most forward thinking financial professionals are willing tospeak to them before they accumulate enough assets.

Building trust with millennials and helping channel their desireto save is the key to building long-term relationships. They arethe largest generation in history, and the opportunity for advisorsrecognize this first is potentially massive.