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If you want to know why some investors are worried about the prospects for financial services stocks, just look at the terms of the Google IPO. The company's decision to auction shares rather than let underwriters place stock with their favorite clients means that investment banks are losing out on millions of dollars in additional income. The deal effectively halved Wall Street's payout. To be sure, it is a great thing for investors and companies ready to test the equity markets. But it underscores the trend of diminished fees -- and tighter profit margins -- in the financial business. Indeed, all across Wall Street, bankers, analysts, and traders have seen their take of the action come down dramatically despite a resurgent market.

Now add this concern: Rising interest rates often hurt financials, particularly the retail side of the business that sells mortgages and credit cards. What's the best way to play the uncertainty of this opaque sector? For the answer we turned to a no-nonsense researcher: Chris Blum of Edward Jones. Blum, 36, is a former FDIC bank examiner who works in St. Louis, far from the Manhattan media spotlight. But while he doesn't attract a lot of attention from producers on CNBC, he has beaten his peers consistently over the past three years. In 2003 he gained 29 percent, vs. 9 percent for the average sector analyst. That followed impressive positive returns during the difficult market in 2001 and 2002.

Blum believes that investors should be selectively buying the biggest financial services companies. They tend to be more diversified than smaller banks and therefore less vulnerable to declines in a particular sector such as mortgage lending. A safe choice now, he says, is Bank of America (BAC, $83). Though BofA is undertaking a $48 billion acquisition of Fleet -- a deal that was widely criticized and sent shares down 12 percent -- Blum reckons that BofA CEO Ken Lewis has a knack for making mergers work. Lewis was brought in to clean up the mess created by the late 1990s merger with NationsBank. Blum also likes the way that Lewis has aggressively gone about settling litigation related to the mutual fund trading scandal. Meanwhile, his strengths as a manager have boosted BofA's pretax profit margins above Citi's. The company's generous dividend (it currently yields 4 percent) is an added sweetener for investors.