In the last two weeks, both Charles Schwab Corp. and Fidelity Investments unveiled so-called "robo" advice programs that offer free or very cheap algorithm-driven portfolio management to investors.

That strikes fear into the hearts of many financial advisors who typically charge 1 percent or more of assets under management to offer personalized advice to investors.

Some, such as Ritholtz Wealth Management, are responding in kind. Earlier this month the firm launched Liftoff, a digital portfolio management tool aimed at young would-be clients with under $100,000 to invest who want account oversight but don't need complete wealth management. The new offering aims to give investors easy and inexpensive (0.4 percent of assets per year) access to the firm's investing strategies and to keep those clients in the fold as their wealth grows, said CEO Josh Brown.

Upside, the San Francisco-based startup that provides the technology behind Liftoff, is also working with other registered investment advisors to offer a way to compete with the direct-to-consumer “robo” offerings from such firms as Betterment LLC and Wealthfront Inc, which offer consumers digital-only access to low-cost ETFs and automatic portfolio design and rebalancing through algorithms.

On Monday, Charles Schwab announced it was moving into the automated advice space with a free product.

Fidelity said on Oct. 15 that it would refer its advisors who wanted a low-cost automated investment offering to Betterment LLC, one of the largest of the new robo-advisors.

Still A Small Space

Advisors who fear their business will be undercut by products like these should remember that the current competitive threat is tiny, accounting for less than $5 billion in assets, said Sophie Schmitt, senior analyst at Aite Group, a research firm. So, panic isn't necessary, though it's probably a good time to make some moves.

“The traditional financial services world is waking up to the reality that clients want to consume financial information digitally and 2014 is a pivotal year," Schmitt said.

Advisors can start to compete with these automated products by offering clients online access and beefing up the technology tools they use themselves when working with clients, she said.

One case in point is Merrill Clear, launched earlier this year by Bank of America's Merrill Lynch, which allows advisors to help clients plan for retirement, and prioritize goals on iPads.

Flesh-and-blood advisors who use digital tools have an advantage over algorithms because they can "marry technology and human behavior," said Daniel Satchkov, president of Rixtrema, a firm that offers software advisors can use to demonstrate portfolio risk to clients.

Brian Eddy, a Beverly, Massachusetts, advisor, said he agrees. His firm, PortfolioFix, offers online access to their accounts and automated portfolio rebalancing. But he also talks to them in person, on the phone and via Skype, the teleconferencing program.

“There’s always going to be a market for someone who’s available to the client on a one-on-one basis,” he said.