My concern is that I am being short sighted and overlooking something important, so I was hoping to get some advice from others before I started talking to them and offering alternatives.
The bold part above from your quote was the reason I used that terminology. I wasn't trying to imply you weren't considering this, just trying to make sure you know how the plan administrators are paid so you can prepare for the discussion.
The providers are required to disclose their fees. If they are > $20K all in, you're paying way too much and you should look around. I don't think you should pay for the services through high expense ratios, I think you should pay a flat fee to both the advisors and the TPA, somewhere in the $4-7K range to each for their professional assistance. Anything beyond that is too much.
What you are paying them for is:
-Plan document writing and compliance - setting up the plan and all its' rules, and amending the plan to keep up with new laws.
-Investment advice (what funds to put in the platform, and employee education).
-Compliance with ERISA requirements (the $17,500 limits, highly compensated employees % limits, testing for new and terminated participants). You need to comply with all the rules so your plan isn't disqualified.
-Quarterly and Annual reporting.
You should have low expense ratio options in your plan, but expect that either the employer or employee will then have to pay fees for plan administration. This is the best way to pay for a 401k IMHO. It keeps the costs reasonable.