That is a good question. Everybody will have their own preferences though. As for me, I am using DAZ G8 characters. You can buy them with a license that allows you to use the 3D models in your games. There are also a lot of clothing items available. My personal workflow is that I put the clothes on in DAZ Studio and then export to UE. It is not an easy or straightforward approach but it works and gives you tons of stuff like morphs that you can use in UE.
Animations is a different problem, converting them with the UE animation transform thingy is possible but you have to do a lot of experimenting with the skeleton setup. I can’t give you a layout here since it’s been a while since I did that and I don’t have the time to get back into that topic.
There’s a plugin on the marketplace called Allright Rig that allows you to do animations by hand in UE so you don’t have to use Daz Studio to animate (which is a pain in the butt) or you can use Blender etc.
I haven’t tried out the new Rig system provided by UE recently but it might do the same thing.
So for me, Daz G8 is the way to go.
Which makes me wonder why no artist has ever taken up the challenge to make a good human pair of character and provide lots of morphs and clothes for them. That could be a license to print money if done well, but apparently no artist is up to the task.