Actual trends of increasing life expectancy, changing demographic structure towards increasing the share of the elderly population, the increase of household wealth in developed and transitive economies, the global economic crisis, and low economic growth have led to a revision of the basic principles of the welfare state. At the same time, the process of financial convergence had become a new phenomenon in the global financial market. The goal of the article is to show the changing role of institutional investors (represented by pension funds and insurance companies) in the global financial market under the impact of the crisis of the welfare state and the processes of financial convergence. Methods used: comparative analysis, factor analysis. Results. Regulators in many countries use large-scale pension reforms to individualize the responsibility for pension provision of population. They «turned» pension cash flows of small individual investors in the direction of private savings instruments and created a single pool of long-term savings, which intensified the competition between the insurance companies and autonomous pension funds (whose assets are comparable, and sometimes more than the GDP of home countries). Insurers are considering financial convergence and access to pension markets as a source of new resources and capital. The major competitive tool in the financial markets is now the financial convergence - interpenetration of institutions from different segments of the financial market on the previously non-core segments. There are advantages for both the insurance company and the pension fund in their struggle for "the pension money of the customers." The increase in investment activity reduces the likelihood of gaps in the financing of long-term national and international investment projects, which is favorable to the economy during the prolonged recession.