My questions is how to get low poly but smooth normal type effect from Houdini to Unreal. I noticed that the fbx import in UE does give a warning about no smoothing groups. I'm assuming these go hand in hand. Any ideas on how to achieve this?

Install game tools, do the “gamedev soften normals”. Will fix the ‘faceted’ look.

Also, I think that smoothing groups is 3dsmax terminology? not sure, but you can ignore that warning, it will still happen even after the procedure above.