I would use skeletal mesh.
to position the arm to pick things up that are in reach, it is best to break it into small steps.
- Determine which objects are within reach.
- Choose one to pick up.
- Rotate the arm to face toward it.
- Once the arm is facing laterally toward the object, you might use IK to retract the arm and pitch it down so that both the rotation and length are correct to land the tip on the object. that will be tge tricky part but I think IK is a good approach.