We respond with the truth–that Jesus Christ is not an “ascended master” on par with any other religious figures the New Age has adopted. We respond as David did in the Psalms when he wrote that our God is above all gods and that there is no other God but him. Jesus claimed to be the incarnate Son of God, equal to the Father not merely a master of spirituality. This ascended masters thing is merely indifferentism in one of it’s strangest manifestations.
But, the idea that Jesus was merely a human being touched by divinity is an old one–it was one of the first heresies the early Church had to deal with, which brought about the declaration that Mary was the theotokos, the Mother of God, and not merely the mother of Jesus humanity nor the mother of a merely human son into whom God entered, etc. In a word, preach the Gospel to these people just as Peter and Paul did to the pagans of their day.